Correlation Between VanEck Vectors and International Drawdown

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

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

Diversification Opportunities for VanEck Vectors and International Drawdown

0.76

Correlation Coefficient

VanEck Vectors  International Drawdown

Poor diversification

The 3 months correlation between VanEck and International is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Vectors Moodys and International Drawdown Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Drawdown and VanEck Vectors 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 Vectors Moodys are associated (or correlated) with International Drawdown. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Drawdown has no effect on the direction of VanEck Vectors i.e., VanEck Vectors and International Drawdown go up and down completely randomly.

Pair Corralation between VanEck Vectors and International Drawdown

Given the investment horizon of 90 days VanEck Vectors is expected to generate 1.04 times less return on investment than International Drawdown. But when comparing it to its historical volatility, VanEck Vectors Moodys is 2.29 times less risky than International Drawdown. It trades about 0.29 of its potential returns per unit of risk. International Drawdown Managed is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  2,040  in International Drawdown Managed on December 4, 2024 and sell it today you would earn a total of  38.00  from holding International Drawdown Managed or generate 1.86% return on investment over 90 days.

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

VanEck Vectors Moodys  vs.  International Drawdown Managed

VanEck Vectors Moodys

Risk-Adjusted Performance

Very Weak

Over the last 90 days VanEck Vectors Moodys has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, VanEck Vectors is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

International Drawdown

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in International Drawdown Managed are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, International Drawdown is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with VanEck Vectors and International Drawdown

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

The idea behind VanEck Vectors Moodys and International Drawdown Managed 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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.