Correlation Between VanEck Agribusiness and VanEck Natural
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
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 Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
VanEck Agribusiness ETF vs. VanEck Natural Resources
Performance |
Timeline |
VanEck Agribusiness ETF |
VanEck Natural Resources |
VanEck Agribusiness and VanEck Natural Volatility Contrast
Predicted Return Density |
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.VanEck Agribusiness vs. Invesco DB Agriculture | ||
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Check out your portfolio center.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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