Correlation Between VanEck Vectors and ETF Series

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

Diversification Opportunities for VanEck Vectors and ETF Series

0.53

Correlation Coefficient

VanEck Vectors  ETF Series

Very weak diversification

The 3 months correlation between VanEck and ETF is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Vectors Moodys and ETF Series Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETF Series Solutions 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 ETF Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETF Series Solutions has no effect on the direction of VanEck Vectors i.e., VanEck Vectors and ETF Series go up and down completely randomly.

Pair Corralation between VanEck Vectors and ETF Series

Given the investment horizon of 90 days VanEck Vectors is expected to generate 21.22 times less return on investment than ETF Series. But when comparing it to its historical volatility, VanEck Vectors Moodys is 3.02 times less risky than ETF Series. It trades about 0.05 of its potential returns per unit of risk. ETF Series Solutions is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest  1,985  in ETF Series Solutions on October 24, 2024 and sell it today you would earn a total of  108.00  from holding ETF Series Solutions or generate 5.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	5.67%
Values	Daily Returns

VanEck Vectors Moodys  vs.  ETF Series Solutions

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.

ETF Series Solutions

Risk-Adjusted Performance

29 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in ETF Series Solutions are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, ETF Series reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VanEck Vectors and ETF Series

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

The idea behind VanEck Vectors Moodys and ETF Series Solutions 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 Stocks Directory module to find actively traded stocks across global markets.