Correlation Between VanEck Digital and Fidelity Crypto

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

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

Diversification Opportunities for VanEck Digital and Fidelity Crypto

1.0

Correlation Coefficient

VanEck Digital  Fidelity Crypto

No risk reduction

The 3 months correlation between VanEck and Fidelity is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Digital Transformation and Fidelity Crypto Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Crypto Industry and VanEck Digital 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 Digital Transformation are associated (or correlated) with Fidelity Crypto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Crypto Industry has no effect on the direction of VanEck Digital i.e., VanEck Digital and Fidelity Crypto go up and down completely randomly.

Pair Corralation between VanEck Digital and Fidelity Crypto

Given the investment horizon of 90 days VanEck Digital Transformation is expected to under-perform the Fidelity Crypto. In addition to that, VanEck Digital is 1.08 times more volatile than Fidelity Crypto Industry. It trades about -0.02 of its total potential returns per unit of risk. Fidelity Crypto Industry is currently generating about -0.02 per unit of volatility. If you would invest  3,654  in Fidelity Crypto Industry on September 22, 2024 and sell it today you would lose (149.00) from holding Fidelity Crypto Industry or give up 4.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.45%
Values	Daily Returns

VanEck Digital Transformation  vs.  Fidelity Crypto Industry

VanEck Digital Trans

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Digital Transformation are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, VanEck Digital reported solid returns over the last few months and may actually be approaching a breakup point.

Fidelity Crypto Industry

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Crypto Industry are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady forward indicators, Fidelity Crypto reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VanEck Digital and Fidelity Crypto

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

The idea behind VanEck Digital Transformation and Fidelity Crypto Industry 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.