Correlation Between Hartford Municipal and VanEck Vectors

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

By analyzing existing cross correlation between Hartford Municipal Opportunities and VanEck Vectors ETF, you can compare the effects of market volatilities on Hartford Municipal and VanEck Vectors 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 Hartford Municipal with a short position of VanEck Vectors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hartford Municipal and VanEck Vectors.

Diversification Opportunities for Hartford Municipal and VanEck Vectors

0.97

Correlation Coefficient

Hartford Municipal  VanEck Vectors

Almost no diversification

The 3 months correlation between Hartford and VanEck is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Hartford Municipal Opportuniti and VanEck Vectors ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Vectors ETF and Hartford Municipal 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 Hartford Municipal Opportunities are associated (or correlated) with VanEck Vectors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Vectors ETF has no effect on the direction of Hartford Municipal i.e., Hartford Municipal and VanEck Vectors go up and down completely randomly.

Pair Corralation between Hartford Municipal and VanEck Vectors

Given the investment horizon of 90 days Hartford Municipal Opportunities is expected to under-perform the VanEck Vectors. But the etf apears to be less risky and, when comparing its historical volatility, Hartford Municipal Opportunities is 1.05 times less risky than VanEck Vectors. The etf trades about -0.08 of its potential returns per unit of risk. The VanEck Vectors ETF is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  4,654  in VanEck Vectors ETF on September 20, 2024 and sell it today you would lose (48.90) from holding VanEck Vectors ETF or give up 1.05% of portfolio value over 90 days.

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

Hartford Municipal Opportuniti  vs.  VanEck Vectors ETF

Hartford Municipal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hartford Municipal Opportunities has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Hartford Municipal is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

VanEck Vectors ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VanEck Vectors ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong primary indicators, VanEck Vectors is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Hartford Municipal and VanEck Vectors

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

The idea behind Hartford Municipal Opportunities and VanEck Vectors ETF 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.

Check out your portfolio center.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.