Correlation Between VanEck ETF and VanEck Vectors

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

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

Diversification Opportunities for VanEck ETF and VanEck Vectors

0.81

Correlation Coefficient

VanEck ETF  VanEck Vectors

Very poor diversification

The 3 months correlation between VanEck and VanEck is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding VanEck ETF Trust and VanEck Vectors ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Vectors ETF and VanEck ETF 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 ETF Trust are associated (or correlated) with VanEck Vectors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Vectors ETF has no effect on the direction of VanEck ETF i.e., VanEck ETF and VanEck Vectors go up and down completely randomly.

Pair Corralation between VanEck ETF and VanEck Vectors

Given the investment horizon of 90 days VanEck ETF Trust is expected to under-perform the VanEck Vectors. In addition to that, VanEck ETF is 1.11 times more volatile than VanEck Vectors ETF. It trades about -0.07 of its total potential returns per unit of risk. VanEck Vectors ETF is currently generating about 0.04 per unit of volatility. If you would invest  3,745  in VanEck Vectors ETF on October 26, 2024 and sell it today you would earn a total of  37.00  from holding VanEck Vectors ETF or generate 0.99% return on investment over 90 days.

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

VanEck ETF Trust  vs.  VanEck Vectors ETF

VanEck ETF Trust

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck ETF Trust are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, VanEck ETF is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

VanEck Vectors ETF

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Vectors ETF are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, VanEck Vectors is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with VanEck ETF and VanEck Vectors

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

The idea behind VanEck ETF Trust and VanEck Vectors ETF 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.

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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.