Correlation Between Alphabet and VanEck ETF

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

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

Diversification Opportunities for Alphabet and VanEck ETF

0.82

Correlation Coefficient

Alphabet  VanEck ETF

Very poor diversification

The 3 months correlation between Alphabet and VanEck is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and VanEck ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck ETF Trust and Alphabet 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 Alphabet Inc Class C are associated (or correlated) with VanEck ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck ETF Trust has no effect on the direction of Alphabet i.e., Alphabet and VanEck ETF go up and down completely randomly.

Pair Corralation between Alphabet and VanEck ETF

Given the investment horizon of 90 days Alphabet Inc Class C is expected to under-perform the VanEck ETF. In addition to that, Alphabet is 1.3 times more volatile than VanEck ETF Trust. It trades about -0.12 of its total potential returns per unit of risk. VanEck ETF Trust is currently generating about -0.08 per unit of volatility. If you would invest  4,230  in VanEck ETF Trust on December 29, 2024 and sell it today you would lose (317.00) from holding VanEck ETF Trust or give up 7.49% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.39%
Values	Daily Returns

Alphabet Inc Class C  vs.  VanEck ETF Trust

Alphabet Class C

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alphabet Inc Class C has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

VanEck ETF Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days VanEck ETF Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Etf's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the ETF venture institutional investors.

Pair Trading with Alphabet and VanEck ETF

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

The idea behind Alphabet Inc Class C and VanEck ETF Trust 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.