Correlation Between Gulf Island and VanEck Vectors

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

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

Diversification Opportunities for Gulf Island and VanEck Vectors

-0.24

Correlation Coefficient

Gulf Island  VanEck Vectors

Very good diversification

The 3 months correlation between Gulf and VanEck is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Gulf Island Fabrication and VanEck Vectors ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Vectors ETF and Gulf Island 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 Gulf Island Fabrication are associated (or correlated) with VanEck Vectors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Vectors ETF has no effect on the direction of Gulf Island i.e., Gulf Island and VanEck Vectors go up and down completely randomly.

Pair Corralation between Gulf Island and VanEck Vectors

Given the investment horizon of 90 days Gulf Island Fabrication is expected to under-perform the VanEck Vectors. In addition to that, Gulf Island is 1.36 times more volatile than VanEck Vectors ETF. It trades about -0.05 of its total potential returns per unit of risk. VanEck Vectors ETF is currently generating about 0.05 per unit of volatility. If you would invest  2,121  in VanEck Vectors ETF on December 27, 2024 and sell it today you would earn a total of  98.00  from holding VanEck Vectors ETF or generate 4.62% return on investment over 90 days.

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

Gulf Island Fabrication  vs.  VanEck Vectors ETF

Gulf Island Fabrication

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gulf Island Fabrication has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's technical and fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

VanEck Vectors ETF

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Vectors ETF are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, VanEck Vectors is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Gulf Island and VanEck Vectors

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

The idea behind Gulf Island Fabrication and VanEck Vectors ETF 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.