Correlation Between Global X and VanEck Video

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

By analyzing existing cross correlation between Global X FinTech and VanEck Video Gaming, you can compare the effects of market volatilities on Global X and VanEck Video 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 Video. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and VanEck Video.

Diversification Opportunities for Global X and VanEck Video

0.88

Correlation Coefficient

Global X  VanEck Video

Very poor diversification

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

Pair Corralation between Global X and VanEck Video

Given the investment horizon of 90 days Global X FinTech is expected to under-perform the VanEck Video. But the etf apears to be less risky and, when comparing its historical volatility, Global X FinTech is 1.1 times less risky than VanEck Video. The etf trades about -0.15 of its potential returns per unit of risk. The VanEck Video Gaming is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  8,309  in VanEck Video Gaming on September 28, 2024 and sell it today you would earn a total of  162.00  from holding VanEck Video Gaming or generate 1.95% return on investment over 90 days.

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

Global X FinTech  vs.  VanEck Video Gaming

Global X FinTech

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global X FinTech are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Global X showed solid returns over the last few months and may actually be approaching a breakup point.

VanEck Video Gaming

Risk-Adjusted Performance

9 of 100

OK

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

Pair Trading with Global X and VanEck Video

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

The idea behind Global X FinTech and VanEck Video Gaming 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.