Correlation Between VanEck Fallen and Global X

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

By analyzing existing cross correlation between VanEck Fallen Angel and Global X SuperIncome, you can compare the effects of market volatilities on VanEck Fallen and Global X 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 Fallen with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Fallen and Global X.

Diversification Opportunities for VanEck Fallen and Global X

0.52

Correlation Coefficient

VanEck Fallen  Global X

Very weak diversification

The 3 months correlation between VanEck and Global is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Fallen Angel and Global X SuperIncome in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X SuperIncome and VanEck Fallen 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 Fallen Angel are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X SuperIncome has no effect on the direction of VanEck Fallen i.e., VanEck Fallen and Global X go up and down completely randomly.

Pair Corralation between VanEck Fallen and Global X

Given the investment horizon of 90 days VanEck Fallen Angel is expected to generate 0.29 times more return on investment than Global X. However, VanEck Fallen Angel is 3.42 times less risky than Global X. It trades about 0.24 of its potential returns per unit of risk. Global X SuperIncome is currently generating about 0.07 per unit of risk. If you would invest  2,855  in VanEck Fallen Angel on October 22, 2024 and sell it today you would earn a total of  35.00  from holding VanEck Fallen Angel or generate 1.23% return on investment over 90 days.

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

VanEck Fallen Angel  vs.  Global X SuperIncome

VanEck Fallen Angel

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Fallen Angel are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, VanEck Fallen is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Global X SuperIncome

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global X SuperIncome has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Global X is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with VanEck Fallen and Global X

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

The idea behind VanEck Fallen Angel and Global X SuperIncome 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.