Correlation Between VanEck Junior and Pan American

Can any of the company-specific risk be diversified away by investing in both VanEck Junior and Pan American 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 Pan American 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 Pan American Silver, you can compare the effects of market volatilities on VanEck Junior and Pan American 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 Pan American. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Junior and Pan American.

Diversification Opportunities for VanEck Junior and Pan American

0.87

Correlation Coefficient

VanEck Junior  Pan American

Very poor diversification

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

Pair Corralation between VanEck Junior and Pan American

Given the investment horizon of 90 days VanEck Junior is expected to generate 1.53 times less return on investment than Pan American. But when comparing it to its historical volatility, VanEck Junior Gold is 1.32 times less risky than Pan American. It trades about 0.05 of its potential returns per unit of risk. Pan American Silver is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,509  in Pan American Silver on October 3, 2024 and sell it today you would earn a total of  513.00  from holding Pan American Silver or generate 34.0% return on investment over 90 days.

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

VanEck Junior Gold  vs.  Pan American Silver

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.

Pan American Silver

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pan American Silver has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Pan American is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with VanEck Junior and Pan American

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

The idea behind VanEck Junior Gold and Pan American Silver 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.