Correlation Between VanEck Vectors and VanEck Sustainable

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

By analyzing existing cross correlation between VanEck Vectors UCITS and VanEck Sustainable European, you can compare the effects of market volatilities on VanEck Vectors and VanEck Sustainable 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 VanEck Sustainable. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Vectors and VanEck Sustainable.

Diversification Opportunities for VanEck Vectors and VanEck Sustainable

0.1

Correlation Coefficient

VanEck Vectors  VanEck Sustainable

Average diversification

The 3 months correlation between VanEck and VanEck is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Vectors UCITS and VanEck Sustainable European in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Sustainable 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 UCITS are associated (or correlated) with VanEck Sustainable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Sustainable has no effect on the direction of VanEck Vectors i.e., VanEck Vectors and VanEck Sustainable go up and down completely randomly.

Pair Corralation between VanEck Vectors and VanEck Sustainable

Assuming the 90 days trading horizon VanEck Vectors is expected to generate 6.4 times less return on investment than VanEck Sustainable. But when comparing it to its historical volatility, VanEck Vectors UCITS is 1.17 times less risky than VanEck Sustainable. It trades about 0.08 of its potential returns per unit of risk. VanEck Sustainable European is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest  7,554  in VanEck Sustainable European on October 26, 2024 and sell it today you would earn a total of  354.00  from holding VanEck Sustainable European or generate 4.69% return on investment over 90 days.

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

VanEck Vectors UCITS  vs.  VanEck Sustainable European

VanEck Vectors UCITS

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Vectors UCITS are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, VanEck Vectors is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

VanEck Sustainable

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Sustainable European are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, VanEck Sustainable is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with VanEck Vectors and VanEck Sustainable

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

The idea behind VanEck Vectors UCITS and VanEck Sustainable European 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.