Correlation Between SPASX Dividend and VanEck Vectors

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

By analyzing existing cross correlation between SPASX Dividend Opportunities and VanEck Vectors Australian, you can compare the effects of market volatilities on SPASX Dividend and VanEck Vectors 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 SPASX Dividend with a short position of VanEck Vectors. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPASX Dividend and VanEck Vectors.

Diversification Opportunities for SPASX Dividend and VanEck Vectors

0.6

Correlation Coefficient

SPASX Dividend  VanEck Vectors

Poor diversification

The 3 months correlation between SPASX and VanEck is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding SPASX Dividend Opportunities and VanEck Vectors Australian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Vectors Australian and SPASX Dividend 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 SPASX Dividend Opportunities are associated (or correlated) with VanEck Vectors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Vectors Australian has no effect on the direction of SPASX Dividend i.e., SPASX Dividend and VanEck Vectors go up and down completely randomly.

Pair Corralation between SPASX Dividend and VanEck Vectors

Assuming the 90 days trading horizon SPASX Dividend Opportunities is expected to under-perform the VanEck Vectors. But the index apears to be less risky and, when comparing its historical volatility, SPASX Dividend Opportunities is 1.47 times less risky than VanEck Vectors. The index trades about -0.01 of its potential returns per unit of risk. The VanEck Vectors Australian is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  3,179  in VanEck Vectors Australian on December 30, 2024 and sell it today you would earn a total of  108.00  from holding VanEck Vectors Australian or generate 3.4% return on investment over 90 days.

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

SPASX Dividend Opportunities  vs.  VanEck Vectors Australian

Pair Trading with SPASX Dividend and VanEck Vectors

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

The idea behind SPASX Dividend Opportunities and VanEck Vectors Australian 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.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.