Correlation Between VanEck Gaming and IShares Global

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

Diversification Opportunities for VanEck Gaming and IShares Global

0.24

Correlation Coefficient

VanEck Gaming  IShares Global

Modest diversification

The 3 months correlation between VanEck and IShares is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Gaming ETF and iShares Global Industrials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Global Indus 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 IShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Global Indus has no effect on the direction of VanEck Gaming i.e., VanEck Gaming and IShares Global go up and down completely randomly.

Pair Corralation between VanEck Gaming and IShares Global

Considering the 90-day investment horizon VanEck Gaming ETF is expected to under-perform the IShares Global. In addition to that, VanEck Gaming is 1.35 times more volatile than iShares Global Industrials. It trades about -0.05 of its total potential returns per unit of risk. iShares Global Industrials is currently generating about 0.07 per unit of volatility. If you would invest  14,278  in iShares Global Industrials on December 27, 2024 and sell it today you would earn a total of  562.00  from holding iShares Global Industrials or generate 3.94% return on investment over 90 days.

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

VanEck Gaming ETF  vs.  iShares Global Industrials

VanEck Gaming ETF

Risk-Adjusted Performance

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 new stock price mess, may contribute to short-term losses for the institutional investors.

iShares Global Indus

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Global Industrials are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, IShares Global is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with VanEck Gaming and IShares Global

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

The idea behind VanEck Gaming ETF and iShares Global Industrials 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.