Correlation Between VanEck Vectors and Financial Investors

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

Diversification Opportunities for VanEck Vectors and Financial Investors

-0.69

Correlation Coefficient

VanEck Vectors  Financial Investors

Excellent diversification

The 3 months correlation between VanEck and Financial is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Vectors Moodys and Financial Investors Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financial Investors Trust 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 Financial Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financial Investors Trust has no effect on the direction of VanEck Vectors i.e., VanEck Vectors and Financial Investors go up and down completely randomly.

Pair Corralation between VanEck Vectors and Financial Investors

Given the investment horizon of 90 days VanEck Vectors Moodys is expected to generate 0.31 times more return on investment than Financial Investors. However, VanEck Vectors Moodys is 3.2 times less risky than Financial Investors. It trades about 0.1 of its potential returns per unit of risk. Financial Investors Trust is currently generating about -0.07 per unit of risk. If you would invest  2,104  in VanEck Vectors Moodys on December 29, 2024 and sell it today you would earn a total of  39.00  from holding VanEck Vectors Moodys or generate 1.85% return on investment over 90 days.

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

VanEck Vectors Moodys  vs.  Financial Investors Trust

VanEck Vectors Moodys

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Vectors Moodys are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. 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.

Financial Investors Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Financial Investors Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Financial Investors is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with VanEck Vectors and Financial Investors

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

The idea behind VanEck Vectors Moodys and Financial Investors Trust 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.