Correlation Between VanEck Vectors and VCRM

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

Diversification Opportunities for VanEck Vectors and VCRM

0.72

Correlation Coefficient

VanEck Vectors  VCRM

Poor diversification

The 3 months correlation between VanEck and VCRM is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Vectors Moodys and VCRM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VCRM 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 VCRM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VCRM has no effect on the direction of VanEck Vectors i.e., VanEck Vectors and VCRM go up and down completely randomly.

Pair Corralation between VanEck Vectors and VCRM

Given the investment horizon of 90 days VanEck Vectors Moodys is expected to generate 1.35 times more return on investment than VCRM. However, VanEck Vectors is 1.35 times more volatile than VCRM. It trades about -0.01 of its potential returns per unit of risk. VCRM is currently generating about -0.11 per unit of risk. If you would invest  2,124  in VanEck Vectors Moodys on October 23, 2024 and sell it today you would lose (5.00) from holding VanEck Vectors Moodys or give up 0.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	65.0%
Values	Daily Returns

VanEck Vectors Moodys  vs.  VCRM

VanEck Vectors Moodys

Risk-Adjusted Performance

0 of 100

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.

VCRM

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with VanEck Vectors and VCRM

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

The idea behind VanEck Vectors Moodys and VCRM 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.