Correlation Between Global X and VanEck Vectors

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

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

Diversification Opportunities for Global X and VanEck Vectors

0.86

Correlation Coefficient

Global X  VanEck Vectors

Very poor diversification

The 3 months correlation between Global and VanEck is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Global X Disruptive and VanEck Vectors ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Vectors ETF and Global X 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 Global X Disruptive are associated (or correlated) with VanEck Vectors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Vectors ETF has no effect on the direction of Global X i.e., Global X and VanEck Vectors go up and down completely randomly.

Pair Corralation between Global X and VanEck Vectors

Given the investment horizon of 90 days Global X Disruptive is expected to generate 0.83 times more return on investment than VanEck Vectors. However, Global X Disruptive is 1.2 times less risky than VanEck Vectors. It trades about 0.1 of its potential returns per unit of risk. VanEck Vectors ETF is currently generating about 0.05 per unit of risk. If you would invest  1,431  in Global X Disruptive on December 28, 2024 and sell it today you would earn a total of  117.00  from holding Global X Disruptive or generate 8.18% return on investment over 90 days.

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

Global X Disruptive  vs.  VanEck Vectors ETF

Global X Disruptive

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Disruptive are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Global X may actually be approaching a critical reversion point that can send shares even higher in April 2025.

VanEck Vectors ETF

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Vectors ETF are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, VanEck Vectors is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Global X and VanEck Vectors

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

The idea behind Global X Disruptive and VanEck Vectors ETF 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.