Correlation Between VanEck Global and VanEck Vectors

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

By analyzing existing cross correlation between VanEck Global Clean and VanEck Vectors Small, you can compare the effects of market volatilities on VanEck Global and VanEck Vectors 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 Global with a short position of VanEck Vectors. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Global and VanEck Vectors.

Diversification Opportunities for VanEck Global and VanEck Vectors

-0.7

Correlation Coefficient

VanEck Global  VanEck Vectors

Excellent diversification

The 3 months correlation between VanEck and VanEck is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Global Clean and VanEck Vectors Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Vectors Small and VanEck Global 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 Global Clean are associated (or correlated) with VanEck Vectors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Vectors Small has no effect on the direction of VanEck Global i.e., VanEck Global and VanEck Vectors go up and down completely randomly.

Pair Corralation between VanEck Global and VanEck Vectors

Assuming the 90 days trading horizon VanEck Global Clean is expected to generate 1.27 times more return on investment than VanEck Vectors. However, VanEck Global is 1.27 times more volatile than VanEck Vectors Small. It trades about -0.01 of its potential returns per unit of risk. VanEck Vectors Small is currently generating about -0.02 per unit of risk. If you would invest  557.00  in VanEck Global Clean on December 30, 2024 and sell it today you would lose (9.00) from holding VanEck Global Clean or give up 1.62% of portfolio value over 90 days.

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

VanEck Global Clean  vs.  VanEck Vectors Small

VanEck Global Clean

Risk-Adjusted Performance

Very Weak

Over the last 90 days VanEck Global Clean has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, VanEck Global is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

VanEck Vectors Small

Risk-Adjusted Performance

Very Weak

Over the last 90 days VanEck Vectors Small has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, VanEck Vectors is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with VanEck Global and VanEck Vectors

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

The idea behind VanEck Global Clean and VanEck Vectors Small 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 Transaction History module to view history of all your transactions and understand their impact on performance.