Correlation Between VanEck Robotics and US Treasury

Can any of the company-specific risk be diversified away by investing in both VanEck Robotics and US Treasury 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 US Treasury 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 US Treasury 20, you can compare the effects of market volatilities on VanEck Robotics and US Treasury 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 US Treasury. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Robotics and US Treasury.

Diversification Opportunities for VanEck Robotics and US Treasury

0.16

Correlation Coefficient

VanEck Robotics  US Treasury

Average diversification

The 3 months correlation between VanEck and UTWY is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Robotics ETF and US Treasury 20 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Treasury 20 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 US Treasury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Treasury 20 has no effect on the direction of VanEck Robotics i.e., VanEck Robotics and US Treasury go up and down completely randomly.

Pair Corralation between VanEck Robotics and US Treasury

Given the investment horizon of 90 days VanEck Robotics ETF is expected to generate 1.73 times more return on investment than US Treasury. However, VanEck Robotics is 1.73 times more volatile than US Treasury 20. It trades about 0.04 of its potential returns per unit of risk. US Treasury 20 is currently generating about -0.18 per unit of risk. If you would invest  4,281  in VanEck Robotics ETF on September 14, 2024 and sell it today you would earn a total of  118.00  from holding VanEck Robotics ETF or generate 2.76% return on investment over 90 days.

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

VanEck Robotics ETF  vs.  US Treasury 20

VanEck Robotics ETF

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Robotics ETF are ranked lower than 3 (%) 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 recent stock price uproar, may contribute to short-horizon losses for the private investors.

US Treasury 20

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days US Treasury 20 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Etf's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Pair Trading with VanEck Robotics and US Treasury

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

The idea behind VanEck Robotics ETF and US Treasury 20 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.