Correlation Between Formidable Fortress and VanEck Vectors

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

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

Diversification Opportunities for Formidable Fortress and VanEck Vectors

0.45

Correlation Coefficient

Formidable Fortress  VanEck Vectors

Very weak diversification

The 3 months correlation between Formidable and VanEck is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Formidable Fortress ETF and VanEck Vectors ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Vectors ETF and Formidable Fortress 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 Formidable Fortress ETF are associated (or correlated) with VanEck Vectors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Vectors ETF has no effect on the direction of Formidable Fortress i.e., Formidable Fortress and VanEck Vectors go up and down completely randomly.

Pair Corralation between Formidable Fortress and VanEck Vectors

Given the investment horizon of 90 days Formidable Fortress ETF is expected to under-perform the VanEck Vectors. In addition to that, Formidable Fortress is 2.55 times more volatile than VanEck Vectors ETF. It trades about -0.04 of its total potential returns per unit of risk. VanEck Vectors ETF is currently generating about -0.06 per unit of volatility. If you would invest  4,579  in VanEck Vectors ETF on December 29, 2024 and sell it today you would lose (50.00) from holding VanEck Vectors ETF or give up 1.09% of portfolio value over 90 days.

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

Formidable Fortress ETF  vs.  VanEck Vectors ETF

Formidable Fortress ETF

Risk-Adjusted Performance

Very Weak

Over the last 90 days Formidable Fortress ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Formidable Fortress is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

VanEck Vectors ETF

Risk-Adjusted Performance

Very Weak

Over the last 90 days VanEck Vectors ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong primary indicators, VanEck Vectors is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Formidable Fortress and VanEck Vectors

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

The idea behind Formidable Fortress ETF and VanEck Vectors ETF 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.