Correlation Between VanEck Vectors and Principal

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

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

Diversification Opportunities for VanEck Vectors and Principal

0.0

Correlation Coefficient

VanEck Vectors  Principal

Pay attention - limited upside

The 3 months correlation between VanEck and Principal is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Vectors ETF and Principal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Principal and VanEck Vectors 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 Vectors ETF are associated (or correlated) with Principal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Principal has no effect on the direction of VanEck Vectors i.e., VanEck Vectors and Principal go up and down completely randomly.

Pair Corralation between VanEck Vectors and Principal

If you would invest  2,135  in VanEck Vectors ETF on December 21, 2024 and sell it today you would earn a total of  130.90  from holding VanEck Vectors ETF or generate 6.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

VanEck Vectors ETF  vs.  Principal

VanEck Vectors ETF

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Vectors ETF are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, VanEck Vectors may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Principal

Risk-Adjusted Performance

Very Weak

Over the last 90 days Principal has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Principal is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with VanEck Vectors and Principal

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

The idea behind VanEck Vectors ETF and Principal 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.

Check out your portfolio center.

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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.