Correlation Between Aquagold International and VanEck Steel

Can any of the company-specific risk be diversified away by investing in both Aquagold International and VanEck Steel 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 Steel 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 Steel ETF, you can compare the effects of market volatilities on Aquagold International and VanEck Steel 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 Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aquagold International and VanEck Steel.

Diversification Opportunities for Aquagold International and VanEck Steel

0.0

Correlation Coefficient

Aquagold International  VanEck Steel

Pay attention - limited upside

The 3 months correlation between Aquagold and VanEck is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Aquagold International and VanEck Steel ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Steel ETF 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 Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Steel ETF has no effect on the direction of Aquagold International i.e., Aquagold International and VanEck Steel go up and down completely randomly.

Pair Corralation between Aquagold International and VanEck Steel

Given the investment horizon of 90 days Aquagold International is expected to generate 34.18 times more return on investment than VanEck Steel. However, Aquagold International is 34.18 times more volatile than VanEck Steel ETF. It trades about 0.06 of its potential returns per unit of risk. VanEck Steel ETF is currently generating about 0.02 per unit of risk. If you would invest  17.00  in Aquagold International on September 20, 2024 and sell it today you would lose (16.40) from holding Aquagold International or give up 96.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Aquagold International  vs.  VanEck Steel ETF

Aquagold International

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Aquagold International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Aquagold International is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

VanEck Steel ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VanEck Steel ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Etf's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Pair Trading with Aquagold International and VanEck Steel

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

The idea behind Aquagold International and VanEck Steel ETF 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.