Correlation Between VanEck Gaming and Global X

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

Diversification Opportunities for VanEck Gaming and Global X

0.32

Correlation Coefficient

VanEck Gaming  Global X

Weak diversification

The 3 months correlation between VanEck and Global is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Gaming ETF and Global X Video in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Video 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 Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Video has no effect on the direction of VanEck Gaming i.e., VanEck Gaming and Global X go up and down completely randomly.

Pair Corralation between VanEck Gaming and Global X

Considering the 90-day investment horizon VanEck Gaming ETF is expected to under-perform the Global X. But the etf apears to be less risky and, when comparing its historical volatility, VanEck Gaming ETF is 1.32 times less risky than Global X. The etf trades about -0.08 of its potential returns per unit of risk. The Global X Video is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2,384  in Global X Video on October 8, 2024 and sell it today you would lose (2.00) from holding Global X Video or give up 0.08% 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.  Global X Video

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

Global X Video

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global X Video has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Global X is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with VanEck Gaming and Global X

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

The idea behind VanEck Gaming ETF and Global X Video 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.