Correlation Between VanEck Gaming and Columbia Emerging

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

By analyzing existing cross correlation between VanEck Gaming ETF and Columbia Emerging Markets, you can compare the effects of market volatilities on VanEck Gaming and Columbia Emerging 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 Gaming with a short position of Columbia Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Gaming and Columbia Emerging.

Diversification Opportunities for VanEck Gaming and Columbia Emerging

0.23

Correlation Coefficient

VanEck Gaming  Columbia Emerging

Modest diversification

The 3 months correlation between VanEck and Columbia is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Gaming ETF and Columbia Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Emerging Markets and VanEck Gaming 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 Gaming ETF are associated (or correlated) with Columbia Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Emerging Markets has no effect on the direction of VanEck Gaming i.e., VanEck Gaming and Columbia Emerging go up and down completely randomly.

Pair Corralation between VanEck Gaming and Columbia Emerging

Considering the 90-day investment horizon VanEck Gaming ETF is expected to generate 1.06 times more return on investment than Columbia Emerging. However, VanEck Gaming is 1.06 times more volatile than Columbia Emerging Markets. It trades about -0.08 of its potential returns per unit of risk. Columbia Emerging Markets is currently generating about -0.11 per unit of risk. If you would invest  4,323  in VanEck Gaming ETF on September 26, 2024 and sell it today you would lose (249.00) from holding VanEck Gaming ETF or give up 5.76% of portfolio value over 90 days.

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

VanEck Gaming ETF  vs.  Columbia Emerging Markets

VanEck Gaming ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VanEck Gaming ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking indicators, VanEck Gaming is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Columbia Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Columbia Emerging Markets has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Etf's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

Pair Trading with VanEck Gaming and Columbia Emerging

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

The idea behind VanEck Gaming ETF and Columbia Emerging Markets 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 CEOs Directory module to screen CEOs from public companies around the world.