Correlation Between VanEck Oil and RiverFront Dynamic

Can any of the company-specific risk be diversified away by investing in both VanEck Oil and RiverFront Dynamic 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 RiverFront Dynamic 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 RiverFront Dynamic Flex Cap, you can compare the effects of market volatilities on VanEck Oil and RiverFront Dynamic 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 RiverFront Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Oil and RiverFront Dynamic.

Diversification Opportunities for VanEck Oil and RiverFront Dynamic

0.64

Correlation Coefficient

VanEck Oil  RiverFront Dynamic

Poor diversification

The 3 months correlation between VanEck and RiverFront is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Oil Services and RiverFront Dynamic Flex Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RiverFront Dynamic Flex 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 RiverFront Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RiverFront Dynamic Flex has no effect on the direction of VanEck Oil i.e., VanEck Oil and RiverFront Dynamic go up and down completely randomly.

Pair Corralation between VanEck Oil and RiverFront Dynamic

Considering the 90-day investment horizon VanEck Oil Services is expected to generate 2.34 times more return on investment than RiverFront Dynamic. However, VanEck Oil is 2.34 times more volatile than RiverFront Dynamic Flex Cap. It trades about 0.09 of its potential returns per unit of risk. RiverFront Dynamic Flex Cap is currently generating about 0.04 per unit of risk. If you would invest  27,445  in VanEck Oil Services on October 21, 2024 and sell it today you would earn a total of  2,506  from holding VanEck Oil Services or generate 9.13% 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.  RiverFront Dynamic Flex Cap

VanEck Oil Services

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Oil Services are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward indicators, VanEck Oil may actually be approaching a critical reversion point that can send shares even higher in February 2025.

RiverFront Dynamic Flex

Risk-Adjusted Performance

2 of 100

Weak

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

Pair Trading with VanEck Oil and RiverFront Dynamic

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

The idea behind VanEck Oil Services and RiverFront Dynamic Flex Cap 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.