Correlation Between YieldMax N and MegaShort

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

By analyzing existing cross correlation between YieldMax N Option and MegaShort 20 Year, you can compare the effects of market volatilities on YieldMax N and MegaShort 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 YieldMax N with a short position of MegaShort. Check out your portfolio center. Please also check ongoing floating volatility patterns of YieldMax N and MegaShort.

Diversification Opportunities for YieldMax N and MegaShort

0.26

Correlation Coefficient

YieldMax N  MegaShort

Modest diversification

The 3 months correlation between YieldMax and MegaShort is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding YieldMax N Option and MegaShort 20 Year in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MegaShort 20 Year and YieldMax N 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 YieldMax N Option are associated (or correlated) with MegaShort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MegaShort 20 Year has no effect on the direction of YieldMax N i.e., YieldMax N and MegaShort go up and down completely randomly.

Pair Corralation between YieldMax N and MegaShort

Given the investment horizon of 90 days YieldMax N Option is expected to generate 1.74 times more return on investment than MegaShort. However, YieldMax N is 1.74 times more volatile than MegaShort 20 Year. It trades about 0.11 of its potential returns per unit of risk. MegaShort 20 Year is currently generating about -0.04 per unit of risk. If you would invest  591.00  in YieldMax N Option on May 3, 2025 and sell it today you would earn a total of  139.00  from holding YieldMax N Option or generate 23.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	72.58%
Values	Daily Returns

YieldMax N Option  vs.  MegaShort 20 Year

YieldMax N Option

Risk-Adjusted Performance

OK

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

MegaShort 20 Year

Risk-Adjusted Performance

Very Weak

Over the last 90 days MegaShort 20 Year has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, MegaShort is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with YieldMax N and MegaShort

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

The idea behind YieldMax N Option and MegaShort 20 Year 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.