Correlation Between Main International and VanEck Digital

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

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

Diversification Opportunities for Main International and VanEck Digital

-0.19

Correlation Coefficient

Main International  VanEck Digital

Good diversification

The 3 months correlation between Main and VanEck is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Main International ETF and VanEck Digital Transformation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Digital Trans and Main International 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 Main International ETF are associated (or correlated) with VanEck Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Digital Trans has no effect on the direction of Main International i.e., Main International and VanEck Digital go up and down completely randomly.

Pair Corralation between Main International and VanEck Digital

Given the investment horizon of 90 days Main International is expected to generate 11.9 times less return on investment than VanEck Digital. But when comparing it to its historical volatility, Main International ETF is 5.87 times less risky than VanEck Digital. It trades about 0.07 of its potential returns per unit of risk. VanEck Digital Transformation is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,524  in VanEck Digital Transformation on October 23, 2024 and sell it today you would earn a total of  152.00  from holding VanEck Digital Transformation or generate 9.97% return on investment over 90 days.

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

Main International ETF  vs.  VanEck Digital Transformation

Main International ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Main International ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Main International is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

VanEck Digital Trans

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Digital Transformation are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, VanEck Digital reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Main International and VanEck Digital

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

The idea behind Main International ETF and VanEck Digital Transformation 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.