Correlation Between VanEck JP and Virtus ETF

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

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

Diversification Opportunities for VanEck JP and Virtus ETF

0.88

Correlation Coefficient

VanEck JP  Virtus ETF

Very poor diversification

The 3 months correlation between VanEck and Virtus is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding VanEck JP Morgan and Virtus ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus ETF Trust and VanEck JP 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 JP Morgan are associated (or correlated) with Virtus ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus ETF Trust has no effect on the direction of VanEck JP i.e., VanEck JP and Virtus ETF go up and down completely randomly.

Pair Corralation between VanEck JP and Virtus ETF

Given the investment horizon of 90 days VanEck JP Morgan is expected to generate 1.42 times more return on investment than Virtus ETF. However, VanEck JP is 1.42 times more volatile than Virtus ETF Trust. It trades about 0.15 of its potential returns per unit of risk. Virtus ETF Trust is currently generating about 0.13 per unit of risk. If you would invest  2,295  in VanEck JP Morgan on December 28, 2024 and sell it today you would earn a total of  89.00  from holding VanEck JP Morgan or generate 3.88% return on investment over 90 days.

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

VanEck JP Morgan  vs.  Virtus ETF Trust

VanEck JP Morgan

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck JP Morgan are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, VanEck JP is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Virtus ETF Trust

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus ETF Trust are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong primary indicators, Virtus ETF is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with VanEck JP and Virtus ETF

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

The idea behind VanEck JP Morgan and Virtus ETF Trust 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.