Correlation Between VanEck Robotics and BrandywineGLOBAL

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

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

Diversification Opportunities for VanEck Robotics and BrandywineGLOBAL

0.34

Correlation Coefficient

VanEck Robotics  BrandywineGLOBAL

Weak diversification

The 3 months correlation between VanEck and BrandywineGLOBAL is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Robotics ETF and BrandywineGLOBAL Dynamic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BrandywineGLOBAL D and VanEck Robotics 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 Robotics ETF are associated (or correlated) with BrandywineGLOBAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BrandywineGLOBAL D has no effect on the direction of VanEck Robotics i.e., VanEck Robotics and BrandywineGLOBAL go up and down completely randomly.

Pair Corralation between VanEck Robotics and BrandywineGLOBAL

Given the investment horizon of 90 days VanEck Robotics is expected to generate 1.56 times less return on investment than BrandywineGLOBAL. In addition to that, VanEck Robotics is 1.5 times more volatile than BrandywineGLOBAL Dynamic. It trades about 0.05 of its total potential returns per unit of risk. BrandywineGLOBAL Dynamic is currently generating about 0.12 per unit of volatility. If you would invest  1,371  in BrandywineGLOBAL Dynamic on September 13, 2024 and sell it today you would earn a total of  82.00  from holding BrandywineGLOBAL Dynamic or generate 5.98% return on investment over 90 days.

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

VanEck Robotics ETF  vs.  BrandywineGLOBAL Dynamic

VanEck Robotics ETF

Risk-Adjusted Performance

4 of 100

Modest

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

BrandywineGLOBAL D

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BrandywineGLOBAL Dynamic are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, BrandywineGLOBAL is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with VanEck Robotics and BrandywineGLOBAL

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

The idea behind VanEck Robotics ETF and BrandywineGLOBAL Dynamic 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.