Correlation Between VanEck Defense and Source Markets

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

Diversification Opportunities for VanEck Defense and Source Markets

0.0

Correlation Coefficient

VanEck Defense  Source Markets

Pay attention - limited upside

The 3 months correlation between VanEck and Source is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Defense ETF and Source Markets plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Source Markets plc 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 Source Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Source Markets plc has no effect on the direction of VanEck Defense i.e., VanEck Defense and Source Markets go up and down completely randomly.

Pair Corralation between VanEck Defense and Source Markets

If you would invest (100.00) in VanEck Defense ETF on October 3, 2024 and sell it today you would earn a total of  100.00  from holding VanEck Defense ETF or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

VanEck Defense ETF  vs.  Source Markets plc

VanEck Defense ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VanEck Defense ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, VanEck Defense is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Source Markets plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Source Markets plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Etf's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

Pair Trading with VanEck Defense and Source Markets

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

The idea behind VanEck Defense ETF and Source Markets plc 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.

Check out your portfolio center.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.