Correlation Between VanEck Junior and DB Gold

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

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

Diversification Opportunities for VanEck Junior and DB Gold

0.87

Correlation Coefficient

VanEck Junior  DB Gold

Very poor diversification

The 3 months correlation between VanEck and DGP is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Junior Gold and DB Gold Double in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DB Gold Double and VanEck Junior 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 Junior Gold are associated (or correlated) with DB Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DB Gold Double has no effect on the direction of VanEck Junior i.e., VanEck Junior and DB Gold go up and down completely randomly.

Pair Corralation between VanEck Junior and DB Gold

Given the investment horizon of 90 days VanEck Junior Gold is expected to under-perform the DB Gold. In addition to that, VanEck Junior is 1.05 times more volatile than DB Gold Double. It trades about -0.13 of its total potential returns per unit of risk. DB Gold Double is currently generating about -0.07 per unit of volatility. If you would invest  6,705  in DB Gold Double on September 21, 2024 and sell it today you would lose (248.99) from holding DB Gold Double or give up 3.71% of portfolio value over 90 days.

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

VanEck Junior Gold  vs.  DB Gold Double

VanEck Junior Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VanEck Junior Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Etf's basic indicators remain steady and the new chaos on Wall Street may also be a sign of medium-term gains for the ETF firm stakeholders.

DB Gold Double

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DB Gold Double has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, DB Gold is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with VanEck Junior and DB Gold

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

The idea behind VanEck Junior Gold and DB Gold Double 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.