Correlation Between VanEck Vectors and SWP Growth

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

Diversification Opportunities for VanEck Vectors and SWP Growth

-0.03

Correlation Coefficient

VanEck Vectors  SWP Growth

Good diversification

The 3 months correlation between VanEck and SWP is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Vectors ETF and SWP Growth Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SWP Growth Income 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 SWP Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SWP Growth Income has no effect on the direction of VanEck Vectors i.e., VanEck Vectors and SWP Growth go up and down completely randomly.

Pair Corralation between VanEck Vectors and SWP Growth

Given the investment horizon of 90 days VanEck Vectors ETF is expected to generate 1.91 times more return on investment than SWP Growth. However, VanEck Vectors is 1.91 times more volatile than SWP Growth Income. It trades about 0.05 of its potential returns per unit of risk. SWP Growth Income is currently generating about -0.04 per unit of risk. 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

VanEck Vectors ETF  vs.  SWP Growth Income

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.

SWP Growth Income

Risk-Adjusted Performance

Very Weak

Over the last 90 days SWP Growth Income has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, SWP Growth 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 Vectors and SWP Growth

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

The idea behind VanEck Vectors ETF and SWP Growth Income 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.