Correlation Between VanEck Defense and Amundi ETF

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

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

Diversification Opportunities for VanEck Defense and Amundi ETF

-0.8

Correlation Coefficient

VanEck Defense  Amundi ETF

Pay attention - limited upside

The 3 months correlation between VanEck and Amundi is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Defense ETF and Amundi ETF MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amundi ETF MSCI and VanEck Defense 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 Defense ETF are associated (or correlated) with Amundi ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amundi ETF MSCI has no effect on the direction of VanEck Defense i.e., VanEck Defense and Amundi ETF go up and down completely randomly.

Pair Corralation between VanEck Defense and Amundi ETF

Assuming the 90 days trading horizon VanEck Defense ETF is expected to generate 1.48 times more return on investment than Amundi ETF. However, VanEck Defense is 1.48 times more volatile than Amundi ETF MSCI. It trades about 0.13 of its potential returns per unit of risk. Amundi ETF MSCI is currently generating about 0.03 per unit of risk. If you would invest  2,063  in VanEck Defense ETF on October 3, 2024 and sell it today you would earn a total of  1,402  from holding VanEck Defense ETF or generate 67.96% return on investment over 90 days.

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

VanEck Defense ETF  vs.  Amundi ETF MSCI

VanEck Defense ETF

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Defense ETF are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, VanEck Defense may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Amundi ETF MSCI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amundi ETF MSCI has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, Amundi ETF is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with VanEck Defense and Amundi ETF

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

The idea behind VanEck Defense ETF and Amundi ETF MSCI 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.