Correlation Between VanEck Short and VanEck CEF

Can any of the company-specific risk be diversified away by investing in both VanEck Short and VanEck CEF at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining VanEck Short and VanEck CEF into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between VanEck Short High and VanEck CEF Municipal, you can compare the effects of market volatilities on VanEck Short and VanEck CEF and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in VanEck Short with a short position of VanEck CEF. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Short and VanEck CEF.

Diversification Opportunities for VanEck Short and VanEck CEF

0.8

Correlation Coefficient

VanEck Short  VanEck CEF

Very poor diversification

The 3 months correlation between VanEck and VanEck is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Short High and VanEck CEF Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck CEF Municipal and VanEck Short is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on VanEck Short High are associated (or correlated) with VanEck CEF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck CEF Municipal has no effect on the direction of VanEck Short i.e., VanEck Short and VanEck CEF go up and down completely randomly.

Pair Corralation between VanEck Short and VanEck CEF

Given the investment horizon of 90 days VanEck Short is expected to generate 1.54 times less return on investment than VanEck CEF. But when comparing it to its historical volatility, VanEck Short High is 1.82 times less risky than VanEck CEF. It trades about 0.07 of its potential returns per unit of risk. VanEck CEF Municipal is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,119  in VanEck CEF Municipal on December 20, 2024 and sell it today you would earn a total of  33.00  from holding VanEck CEF Municipal or generate 1.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

VanEck Short High  vs.  VanEck CEF Municipal

VanEck Short High

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Short High are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, VanEck Short is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

VanEck CEF Municipal

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck CEF Municipal are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, VanEck CEF is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with VanEck Short and VanEck CEF

The main advantage of trading using opposite VanEck Short and VanEck CEF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Short position performs unexpectedly, VanEck CEF can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in VanEck CEF will offset losses from the drop in VanEck CEF's long position.

The idea behind VanEck Short High and VanEck CEF Municipal pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.