Correlation Between VanEck Agribusiness and VanEck Natural

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Can any of the company-specific risk be diversified away by investing in both VanEck Agribusiness and VanEck Natural 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 Agribusiness and VanEck Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VanEck Agribusiness ETF and VanEck Natural Resources, you can compare the effects of market volatilities on VanEck Agribusiness and VanEck Natural 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 Agribusiness with a short position of VanEck Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Agribusiness and VanEck Natural.

Diversification Opportunities for VanEck Agribusiness and VanEck Natural

VanEckVanEckDiversified AwayVanEckVanEckDiversified Away100%
0.95
  Correlation Coefficient

Almost no diversification

The 3 months correlation between VanEck and VanEck is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Agribusiness ETF and VanEck Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Natural Resources and VanEck Agribusiness 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 Agribusiness ETF are associated (or correlated) with VanEck Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Natural Resources has no effect on the direction of VanEck Agribusiness i.e., VanEck Agribusiness and VanEck Natural go up and down completely randomly.

Pair Corralation between VanEck Agribusiness and VanEck Natural

Considering the 90-day investment horizon VanEck Agribusiness ETF is expected to generate 1.0 times more return on investment than VanEck Natural. However, VanEck Agribusiness ETF is 1.0 times less risky than VanEck Natural. It trades about -0.18 of its potential returns per unit of risk. VanEck Natural Resources is currently generating about -0.21 per unit of risk. If you would invest  7,429  in VanEck Agribusiness ETF on September 24, 2024 and sell it today you would lose (737.00) from holding VanEck Agribusiness ETF or give up 9.92% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

VanEck Agribusiness ETF  vs.  VanEck Natural Resources

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -8-6-4-202
JavaScript chart by amCharts 3.21.15MOO HAP
       Timeline  
VanEck Agribusiness ETF 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days VanEck Agribusiness ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec666870727476
VanEck Natural Resources 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days VanEck Natural Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest uncertain performance, the Etf's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the ETF retail investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec4647484950515253

VanEck Agribusiness and VanEck Natural Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-1.55-1.19-0.83-0.47-0.110.09550.450.811.171.53 0.10.20.30.40.5
JavaScript chart by amCharts 3.21.15MOO HAP
       Returns  

Pair Trading with VanEck Agribusiness and VanEck Natural

The main advantage of trading using opposite VanEck Agribusiness and VanEck Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Agribusiness position performs unexpectedly, VanEck Natural 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 VanEck Natural will offset losses from the drop in VanEck Natural's long position.
The idea behind VanEck Agribusiness ETF and VanEck Natural Resources 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.

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