Correlation Between Champion Iron and VanEck 1

Can any of the company-specific risk be diversified away by investing in both Champion Iron and VanEck 1 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 Champion Iron and VanEck 1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Champion Iron and VanEck 1 5 Year, you can compare the effects of market volatilities on Champion Iron and VanEck 1 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 Champion Iron with a short position of VanEck 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champion Iron and VanEck 1.

Diversification Opportunities for Champion Iron and VanEck 1

-0.52

Correlation Coefficient

Champion Iron  VanEck 1

Excellent diversification

The 3 months correlation between Champion and VanEck is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Champion Iron and VanEck 1 5 Year in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck 1 5 and Champion Iron 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 Champion Iron are associated (or correlated) with VanEck 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck 1 5 has no effect on the direction of Champion Iron i.e., Champion Iron and VanEck 1 go up and down completely randomly.

Pair Corralation between Champion Iron and VanEck 1

Assuming the 90 days trading horizon Champion Iron is expected to under-perform the VanEck 1. In addition to that, Champion Iron is 15.61 times more volatile than VanEck 1 5 Year. It trades about -0.05 of its total potential returns per unit of risk. VanEck 1 5 Year is currently generating about 0.13 per unit of volatility. If you would invest  5,086  in VanEck 1 5 Year on December 31, 2024 and sell it today you would earn a total of  57.00  from holding VanEck 1 5 Year or generate 1.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	92.06%
Values	Daily Returns

Champion Iron  vs.  VanEck 1 5 Year

Champion Iron

Risk-Adjusted Performance

Very Weak

Over the last 90 days Champion Iron has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

VanEck 1 5

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck 1 5 Year are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, VanEck 1 is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Champion Iron and VanEck 1

The main advantage of trading using opposite Champion Iron and VanEck 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Champion Iron position performs unexpectedly, VanEck 1 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 1 will offset losses from the drop in VanEck 1's long position.

The idea behind Champion Iron and VanEck 1 5 Year 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.