Correlation Between VanEck IBoxx and VanEck TRON

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

By analyzing existing cross correlation between VanEck iBoxx EUR and VanEck TRON ETN, you can compare the effects of market volatilities on VanEck IBoxx and VanEck TRON 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 IBoxx with a short position of VanEck TRON. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck IBoxx and VanEck TRON.

Diversification Opportunities for VanEck IBoxx and VanEck TRON

0.59

Correlation Coefficient

VanEck IBoxx  VanEck TRON

Very weak diversification

The 3 months correlation between VanEck and VanEck is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding VanEck iBoxx EUR and VanEck TRON ETN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck TRON ETN and VanEck IBoxx 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 iBoxx EUR are associated (or correlated) with VanEck TRON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck TRON ETN has no effect on the direction of VanEck IBoxx i.e., VanEck IBoxx and VanEck TRON go up and down completely randomly.

Pair Corralation between VanEck IBoxx and VanEck TRON

Assuming the 90 days trading horizon VanEck IBoxx is expected to generate 3998.67 times less return on investment than VanEck TRON. But when comparing it to its historical volatility, VanEck iBoxx EUR is 45.58 times less risky than VanEck TRON. It trades about 0.0 of its potential returns per unit of risk. VanEck TRON ETN is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,594  in VanEck TRON ETN on September 24, 2024 and sell it today you would earn a total of  1,000.00  from holding VanEck TRON ETN or generate 62.74% return on investment over 90 days.

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

VanEck iBoxx EUR  vs.  VanEck TRON ETN

VanEck iBoxx EUR

Risk-Adjusted Performance

0 of 100

Very Weak

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

VanEck TRON ETN

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck TRON ETN are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, VanEck TRON unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VanEck IBoxx and VanEck TRON

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

The idea behind VanEck iBoxx EUR and VanEck TRON ETN 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.