Correlation Between VanEck Mortgage and Vanguard Real

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

By analyzing existing cross correlation between VanEck Mortgage REIT and Vanguard Real Estate, you can compare the effects of market volatilities on VanEck Mortgage and Vanguard Real 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 Mortgage with a short position of Vanguard Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Mortgage and Vanguard Real.

Diversification Opportunities for VanEck Mortgage and Vanguard Real

0.72

Correlation Coefficient

VanEck Mortgage  Vanguard Real

Poor diversification

The 3 months correlation between VanEck and Vanguard is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Mortgage REIT and Vanguard Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Real Estate and VanEck Mortgage 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 Mortgage REIT are associated (or correlated) with Vanguard Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Real Estate has no effect on the direction of VanEck Mortgage i.e., VanEck Mortgage and Vanguard Real go up and down completely randomly.

Pair Corralation between VanEck Mortgage and Vanguard Real

Given the investment horizon of 90 days VanEck Mortgage REIT is expected to generate 0.93 times more return on investment than Vanguard Real. However, VanEck Mortgage REIT is 1.08 times less risky than Vanguard Real. It trades about -0.09 of its potential returns per unit of risk. Vanguard Real Estate is currently generating about -0.13 per unit of risk. If you would invest  1,157  in VanEck Mortgage REIT on September 25, 2024 and sell it today you would lose (63.00) from holding VanEck Mortgage REIT or give up 5.45% of portfolio value over 90 days.

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

VanEck Mortgage REIT  vs.  Vanguard Real Estate

VanEck Mortgage REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VanEck Mortgage REIT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, VanEck Mortgage is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Vanguard Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unfluctuating performance, the Etf's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the ETF retail investors.

Pair Trading with VanEck Mortgage and Vanguard Real

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

The idea behind VanEck Mortgage REIT and Vanguard Real Estate 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..