Correlation Between VanEck ETF and Blackrock ETF

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

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

Diversification Opportunities for VanEck ETF and Blackrock ETF

0.25

Correlation Coefficient

VanEck ETF  Blackrock ETF

Modest diversification

The 3 months correlation between VanEck and Blackrock is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding VanEck ETF Trust and Blackrock ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock ETF Trust and VanEck ETF 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 ETF Trust are associated (or correlated) with Blackrock ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock ETF Trust has no effect on the direction of VanEck ETF i.e., VanEck ETF and Blackrock ETF go up and down completely randomly.

Pair Corralation between VanEck ETF and Blackrock ETF

Given the investment horizon of 90 days VanEck ETF Trust is expected to generate 0.48 times more return on investment than Blackrock ETF. However, VanEck ETF Trust is 2.1 times less risky than Blackrock ETF. It trades about 0.23 of its potential returns per unit of risk. Blackrock ETF Trust is currently generating about 0.01 per unit of risk. If you would invest  5,227  in VanEck ETF Trust on December 29, 2024 and sell it today you would earn a total of  58.00  from holding VanEck ETF Trust or generate 1.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

VanEck ETF Trust  vs.  Blackrock ETF Trust

VanEck ETF Trust

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck ETF Trust are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, VanEck ETF is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Blackrock ETF Trust

Risk-Adjusted Performance

Very Weak

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

Pair Trading with VanEck ETF and Blackrock ETF

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

The idea behind VanEck ETF Trust and Blackrock ETF Trust 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.