Correlation Between VanEck Defense and Ossiam Irl

Can any of the company-specific risk be diversified away by investing in both VanEck Defense and Ossiam Irl 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 Ossiam Irl 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 Ossiam Irl Icav, you can compare the effects of market volatilities on VanEck Defense and Ossiam Irl 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 Ossiam Irl. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Defense and Ossiam Irl.

Diversification Opportunities for VanEck Defense and Ossiam Irl

0.79

Correlation Coefficient

VanEck Defense  Ossiam Irl

Poor diversification

The 3 months correlation between VanEck and Ossiam is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Defense ETF and Ossiam Irl Icav in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ossiam Irl Icav 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 Ossiam Irl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ossiam Irl Icav has no effect on the direction of VanEck Defense i.e., VanEck Defense and Ossiam Irl go up and down completely randomly.

Pair Corralation between VanEck Defense and Ossiam Irl

Assuming the 90 days trading horizon VanEck Defense ETF is expected to under-perform the Ossiam Irl. In addition to that, VanEck Defense is 1.97 times more volatile than Ossiam Irl Icav. It trades about -0.19 of its total potential returns per unit of risk. Ossiam Irl Icav is currently generating about -0.14 per unit of volatility. If you would invest  20,880  in Ossiam Irl Icav on September 23, 2024 and sell it today you would lose (325.00) from holding Ossiam Irl Icav or give up 1.56% of portfolio value over 90 days.

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

VanEck Defense ETF  vs.  Ossiam Irl Icav

VanEck Defense ETF

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Defense ETF are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, VanEck Defense may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Ossiam Irl Icav

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ossiam Irl Icav are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Ossiam Irl may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with VanEck Defense and Ossiam Irl

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

The idea behind VanEck Defense ETF and Ossiam Irl Icav 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.