Correlation Between VanEck Morningstar and BetaShares Geared

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

By analyzing existing cross correlation between VanEck Morningstar Wide and BetaShares Geared Equity, you can compare the effects of market volatilities on VanEck Morningstar and BetaShares Geared 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 Morningstar with a short position of BetaShares Geared. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Morningstar and BetaShares Geared.

Diversification Opportunities for VanEck Morningstar and BetaShares Geared

0.06

Correlation Coefficient

VanEck Morningstar  BetaShares Geared

Significant diversification

The 3 months correlation between VanEck and BetaShares is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Morningstar Wide and BetaShares Geared Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaShares Geared Equity and VanEck Morningstar 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 Morningstar Wide are associated (or correlated) with BetaShares Geared. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaShares Geared Equity has no effect on the direction of VanEck Morningstar i.e., VanEck Morningstar and BetaShares Geared go up and down completely randomly.

Pair Corralation between VanEck Morningstar and BetaShares Geared

Assuming the 90 days trading horizon VanEck Morningstar Wide is expected to generate 0.33 times more return on investment than BetaShares Geared. However, VanEck Morningstar Wide is 3.02 times less risky than BetaShares Geared. It trades about -0.05 of its potential returns per unit of risk. BetaShares Geared Equity is currently generating about -0.05 per unit of risk. If you would invest  13,220  in VanEck Morningstar Wide on December 2, 2024 and sell it today you would lose (274.00) from holding VanEck Morningstar Wide or give up 2.07% of portfolio value over 90 days.

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

VanEck Morningstar Wide  vs.  BetaShares Geared Equity

VanEck Morningstar Wide

Risk-Adjusted Performance

Very Weak

Over the last 90 days VanEck Morningstar Wide has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, VanEck Morningstar is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

BetaShares Geared Equity

Risk-Adjusted Performance

Very Weak

Over the last 90 days BetaShares Geared Equity has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Etf's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Pair Trading with VanEck Morningstar and BetaShares Geared

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

The idea behind VanEck Morningstar Wide and BetaShares Geared Equity 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.