Correlation Between Deka EURO and VanEck Vectors

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

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

Diversification Opportunities for Deka EURO and VanEck Vectors

-0.75

Correlation Coefficient

Deka EURO  VanEck Vectors

Pay attention - limited upside

The 3 months correlation between Deka and VanEck is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Deka EURO STOXX and VanEck Vectors UCITS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Vectors UCITS and Deka EURO 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 Deka EURO STOXX 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 UCITS has no effect on the direction of Deka EURO i.e., Deka EURO and VanEck Vectors go up and down completely randomly.

Pair Corralation between Deka EURO and VanEck Vectors

Assuming the 90 days trading horizon Deka EURO STOXX is expected to under-perform the VanEck Vectors. But the etf apears to be less risky and, when comparing its historical volatility, Deka EURO STOXX is 1.05 times less risky than VanEck Vectors. The etf trades about -0.02 of its potential returns per unit of risk. The VanEck Vectors UCITS is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  5,790  in VanEck Vectors UCITS on September 18, 2024 and sell it today you would earn a total of  145.00  from holding VanEck Vectors UCITS or generate 2.5% return on investment over 90 days.

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

Deka EURO STOXX  vs.  VanEck Vectors UCITS

Deka EURO STOXX

Risk-Adjusted Performance

0 of 100

Very Weak

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

VanEck Vectors UCITS

Risk-Adjusted Performance

15 of 100

Good

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

Pair Trading with Deka EURO and VanEck Vectors

The main advantage of trading using opposite Deka EURO and VanEck Vectors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deka EURO 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 Deka EURO STOXX and VanEck Vectors UCITS 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.