Correlation Between VanEck Global and VanEck Semiconductor

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

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

Diversification Opportunities for VanEck Global and VanEck Semiconductor

0.58

Correlation Coefficient

VanEck Global  VanEck Semiconductor

Very weak diversification

The 3 months correlation between VanEck and VanEck is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Global Fallen and VanEck Semiconductor UCITS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Semiconductor and VanEck Global 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 Global Fallen are associated (or correlated) with VanEck Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Semiconductor has no effect on the direction of VanEck Global i.e., VanEck Global and VanEck Semiconductor go up and down completely randomly.

Pair Corralation between VanEck Global and VanEck Semiconductor

Assuming the 90 days trading horizon VanEck Global Fallen is expected to generate 0.08 times more return on investment than VanEck Semiconductor. However, VanEck Global Fallen is 12.69 times less risky than VanEck Semiconductor. It trades about 0.02 of its potential returns per unit of risk. VanEck Semiconductor UCITS is currently generating about -0.09 per unit of risk. If you would invest  5,999  in VanEck Global Fallen on December 30, 2024 and sell it today you would earn a total of  14.00  from holding VanEck Global Fallen or generate 0.23% return on investment over 90 days.

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

VanEck Global Fallen  vs.  VanEck Semiconductor UCITS

VanEck Global Fallen

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Global Fallen are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, VanEck Global is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

VanEck Semiconductor

Risk-Adjusted Performance

Very Weak

Over the last 90 days VanEck Semiconductor UCITS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Etf's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the fund sophisticated investors.

Pair Trading with VanEck Global and VanEck Semiconductor

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

The idea behind VanEck Global Fallen and VanEck Semiconductor UCITS 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.