Correlation Between VanEck Oil and Exchange Traded

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

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

Diversification Opportunities for VanEck Oil and Exchange Traded

0.71

Correlation Coefficient

VanEck Oil  Exchange Traded

Poor diversification

The 3 months correlation between VanEck and Exchange is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Oil Services and Exchange Traded Concepts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exchange Traded Concepts and VanEck Oil 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 Oil Services are associated (or correlated) with Exchange Traded. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exchange Traded Concepts has no effect on the direction of VanEck Oil i.e., VanEck Oil and Exchange Traded go up and down completely randomly.

Pair Corralation between VanEck Oil and Exchange Traded

Considering the 90-day investment horizon VanEck Oil Services is expected to under-perform the Exchange Traded. In addition to that, VanEck Oil is 1.26 times more volatile than Exchange Traded Concepts. It trades about -0.02 of its total potential returns per unit of risk. Exchange Traded Concepts is currently generating about 0.02 per unit of volatility. If you would invest  2,848  in Exchange Traded Concepts on December 30, 2024 and sell it today you would earn a total of  33.00  from holding Exchange Traded Concepts or generate 1.16% return on investment over 90 days.

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

VanEck Oil Services  vs.  Exchange Traded Concepts

VanEck Oil Services

Risk-Adjusted Performance

Very Weak

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

Exchange Traded Concepts

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Exchange Traded Concepts are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, Exchange Traded is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with VanEck Oil and Exchange Traded

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

The idea behind VanEck Oil Services and Exchange Traded Concepts 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.