Correlation Between Formidable ETF and VanEck Inflation

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

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

Diversification Opportunities for Formidable ETF and VanEck Inflation

0.18

Correlation Coefficient

Formidable ETF  VanEck Inflation

Average diversification

The 3 months correlation between Formidable and VanEck is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Formidable ETF and VanEck Inflation Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Inflation All and Formidable ETF 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 Formidable ETF are associated (or correlated) with VanEck Inflation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Inflation All has no effect on the direction of Formidable ETF i.e., Formidable ETF and VanEck Inflation go up and down completely randomly.

Pair Corralation between Formidable ETF and VanEck Inflation

Given the investment horizon of 90 days Formidable ETF is expected to under-perform the VanEck Inflation. In addition to that, Formidable ETF is 1.06 times more volatile than VanEck Inflation Allocation. It trades about 0.0 of its total potential returns per unit of risk. VanEck Inflation Allocation is currently generating about 0.17 per unit of volatility. If you would invest  2,794  in VanEck Inflation Allocation on December 30, 2024 and sell it today you would earn a total of  226.00  from holding VanEck Inflation Allocation or generate 8.09% return on investment over 90 days.

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

Formidable ETF  vs.  VanEck Inflation Allocation

Formidable ETF

Risk-Adjusted Performance

Very Weak

Over the last 90 days Formidable ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Formidable ETF is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

VanEck Inflation All

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Inflation Allocation are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, VanEck Inflation may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Formidable ETF and VanEck Inflation

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

The idea behind Formidable ETF and VanEck Inflation Allocation 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.