Correlation Between Aquagold International and VanEck Natural
Can any of the company-specific risk be diversified away by investing in both Aquagold International and VanEck Natural 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 Aquagold International and VanEck Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aquagold International and VanEck Natural Resources, you can compare the effects of market volatilities on Aquagold International and VanEck Natural 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 Aquagold International with a short position of VanEck Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aquagold International and VanEck Natural.
Diversification Opportunities for Aquagold International and VanEck Natural
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Aquagold and VanEck is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Aquagold International and VanEck Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Natural Resources and Aquagold International 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 Aquagold International are associated (or correlated) with VanEck Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Natural Resources has no effect on the direction of Aquagold International i.e., Aquagold International and VanEck Natural go up and down completely randomly.
Pair Corralation between Aquagold International and VanEck Natural
Given the investment horizon of 90 days Aquagold International is expected to under-perform the VanEck Natural. In addition to that, Aquagold International is 13.66 times more volatile than VanEck Natural Resources. It trades about -0.12 of its total potential returns per unit of risk. VanEck Natural Resources is currently generating about -0.21 per unit of volatility. If you would invest 5,134 in VanEck Natural Resources on September 30, 2024 and sell it today you would lose (579.00) from holding VanEck Natural Resources or give up 11.28% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Aquagold International vs. VanEck Natural Resources
Performance |
Timeline |
Aquagold International |
VanEck Natural Resources |
Aquagold International and VanEck Natural Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Aquagold International and VanEck Natural
The main advantage of trading using opposite Aquagold International and VanEck Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aquagold International position performs unexpectedly, VanEck Natural 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 Natural will offset losses from the drop in VanEck Natural's long position.Aquagold International vs. PepsiCo | ||
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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