Correlation Between Nine Energy and VanEck Vectors

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

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

Diversification Opportunities for Nine Energy and VanEck Vectors

-0.15

Correlation Coefficient

Nine Energy  VanEck Vectors

Good diversification

The 3 months correlation between Nine and VanEck is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Nine Energy Service 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 Nine Energy 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 Nine Energy Service 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 Nine Energy i.e., Nine Energy and VanEck Vectors go up and down completely randomly.

Pair Corralation between Nine Energy and VanEck Vectors

Given the investment horizon of 90 days Nine Energy Service is expected to generate 28.9 times more return on investment than VanEck Vectors. However, Nine Energy is 28.9 times more volatile than VanEck Vectors ETF. It trades about 0.1 of its potential returns per unit of risk. VanEck Vectors ETF is currently generating about -0.01 per unit of risk. If you would invest  97.00  in Nine Energy Service on December 24, 2024 and sell it today you would earn a total of  32.00  from holding Nine Energy Service or generate 32.99% return on investment over 90 days.

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

Nine Energy Service  vs.  VanEck Vectors ETF

Nine Energy Service

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nine Energy Service are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Nine Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.

VanEck Vectors ETF

Risk-Adjusted Performance

Very Weak

Over the last 90 days VanEck Vectors ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong primary indicators, VanEck Vectors is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Nine Energy and VanEck Vectors

The main advantage of trading using opposite Nine Energy and VanEck Vectors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nine Energy 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 Nine Energy Service 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.

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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.