Correlation Between VanEck Gaming and Invesco DWA

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

Diversification Opportunities for VanEck Gaming and Invesco DWA

0.21

Correlation Coefficient

VanEck Gaming  Invesco DWA

Modest diversification

The 3 months correlation between VanEck and Invesco is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Gaming ETF and Invesco DWA Industrials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco DWA Industrials 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 Invesco DWA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco DWA Industrials has no effect on the direction of VanEck Gaming i.e., VanEck Gaming and Invesco DWA go up and down completely randomly.

Pair Corralation between VanEck Gaming and Invesco DWA

Considering the 90-day investment horizon VanEck Gaming ETF is expected to generate 0.67 times more return on investment than Invesco DWA. However, VanEck Gaming ETF is 1.48 times less risky than Invesco DWA. It trades about -0.05 of its potential returns per unit of risk. Invesco DWA Industrials is currently generating about -0.07 per unit of risk. If you would invest  4,091  in VanEck Gaming ETF on December 27, 2024 and sell it today you would lose (184.00) from holding VanEck Gaming ETF or give up 4.5% 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.  Invesco DWA 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.

Invesco DWA Industrials

Risk-Adjusted Performance

Very Weak

Over the last 90 days Invesco DWA Industrials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak 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 Invesco DWA

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

The idea behind VanEck Gaming ETF and Invesco DWA 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.