Correlation Between VanEck Short and VanEck Long

Can any of the company-specific risk be diversified away by investing in both VanEck Short and VanEck Long 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 Long into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between VanEck Short Muni and VanEck Long Muni, you can compare the effects of market volatilities on VanEck Short and VanEck Long 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 Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Short and VanEck Long.

Diversification Opportunities for VanEck Short and VanEck Long

0.32

Correlation Coefficient

VanEck Short  VanEck Long

Weak diversification

The 3 months correlation between VanEck and VanEck is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Short Muni and VanEck Long Muni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Long Muni 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 Muni are associated (or correlated) with VanEck Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Long Muni has no effect on the direction of VanEck Short i.e., VanEck Short and VanEck Long go up and down completely randomly.

Pair Corralation between VanEck Short and VanEck Long

Considering the 90-day investment horizon VanEck Short Muni is expected to generate 0.34 times more return on investment than VanEck Long. However, VanEck Short Muni is 2.93 times less risky than VanEck Long. It trades about 0.06 of its potential returns per unit of risk. VanEck Long Muni is currently generating about -0.1 per unit of risk. If you would invest  1,701  in VanEck Short Muni on December 28, 2024 and sell it today you would earn a total of  8.00  from holding VanEck Short Muni or generate 0.47% return on investment over 90 days.

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

VanEck Short Muni  vs.  VanEck Long Muni

VanEck Short Muni

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Short Muni are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong primary indicators, VanEck Short is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

VanEck Long Muni

Risk-Adjusted Performance

Very Weak

Over the last 90 days VanEck Long Muni has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, VanEck Long is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with VanEck Short and VanEck Long

The main advantage of trading using opposite VanEck Short and VanEck Long positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Short position performs unexpectedly, VanEck Long 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 Long will offset losses from the drop in VanEck Long's long position.

The idea behind VanEck Short Muni and VanEck Long Muni 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.