Correlation Between SP500 VIX and MYT Netherlands

Can any of the company-specific risk be diversified away by investing in both SP500 VIX and MYT Netherlands 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 SP500 VIX and MYT Netherlands into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SP500 VIX Futures and MYT Netherlands Parent, you can compare the effects of market volatilities on SP500 VIX and MYT Netherlands 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 SP500 VIX with a short position of MYT Netherlands. Check out your portfolio center. Please also check ongoing floating volatility patterns of SP500 VIX and MYT Netherlands.

Diversification Opportunities for SP500 VIX and MYT Netherlands

-0.07

Correlation Coefficient

SP500 VIX  MYT Netherlands

Good diversification

The 3 months correlation between SP500 and MYT is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding SP500 VIX Futures and MYT Netherlands Parent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MYT Netherlands Parent and SP500 VIX 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 SP500 VIX Futures are associated (or correlated) with MYT Netherlands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MYT Netherlands Parent has no effect on the direction of SP500 VIX i.e., SP500 VIX and MYT Netherlands go up and down completely randomly.

Pair Corralation between SP500 VIX and MYT Netherlands

Assuming the 90 days trading horizon SP500 VIX is expected to generate 3.09 times less return on investment than MYT Netherlands. But when comparing it to its historical volatility, SP500 VIX Futures is 1.89 times less risky than MYT Netherlands. It trades about 0.04 of its potential returns per unit of risk. MYT Netherlands Parent is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  687.00  in MYT Netherlands Parent on December 22, 2024 and sell it today you would earn a total of  98.00  from holding MYT Netherlands Parent or generate 14.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.72%
Values	Daily Returns

SP500 VIX Futures  vs.  MYT Netherlands Parent

Pair Trading with SP500 VIX and MYT Netherlands

The main advantage of trading using opposite SP500 VIX and MYT Netherlands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SP500 VIX position performs unexpectedly, MYT Netherlands 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 MYT Netherlands will offset losses from the drop in MYT Netherlands' long position.

The idea behind SP500 VIX Futures and MYT Netherlands Parent 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.