Correlation Between VanEck Robotics and CARPENTER

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

Diversification Opportunities for VanEck Robotics and CARPENTER

0.28

Correlation Coefficient

VanEck Robotics  CARPENTER

Modest diversification

The 3 months correlation between VanEck and CARPENTER is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Robotics ETF and CARPENTER TECHNOLOGY P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARPENTER TECHNOLOGY 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 CARPENTER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CARPENTER TECHNOLOGY has no effect on the direction of VanEck Robotics i.e., VanEck Robotics and CARPENTER go up and down completely randomly.

Pair Corralation between VanEck Robotics and CARPENTER

Given the investment horizon of 90 days VanEck Robotics ETF is expected to generate 2.19 times more return on investment than CARPENTER. However, VanEck Robotics is 2.19 times more volatile than CARPENTER TECHNOLOGY P. It trades about 0.06 of its potential returns per unit of risk. CARPENTER TECHNOLOGY P is currently generating about 0.01 per unit of risk. If you would invest  3,250  in VanEck Robotics ETF on October 9, 2024 and sell it today you would earn a total of  985.00  from holding VanEck Robotics ETF or generate 30.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	88.89%
Values	Daily Returns

VanEck Robotics ETF  vs.  CARPENTER TECHNOLOGY P

VanEck Robotics ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VanEck Robotics ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, VanEck Robotics is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

CARPENTER TECHNOLOGY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CARPENTER TECHNOLOGY P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CARPENTER is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with VanEck Robotics and CARPENTER

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

The idea behind VanEck Robotics ETF and CARPENTER TECHNOLOGY P 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.