Correlation Between ETRACS 2xMonthly and VanEck Video

Can any of the company-specific risk be diversified away by investing in both ETRACS 2xMonthly and VanEck Video 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 ETRACS 2xMonthly and VanEck Video into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ETRACS 2xMonthly Pay and VanEck Video Gaming, you can compare the effects of market volatilities on ETRACS 2xMonthly and VanEck Video 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 ETRACS 2xMonthly with a short position of VanEck Video. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETRACS 2xMonthly and VanEck Video.

Diversification Opportunities for ETRACS 2xMonthly and VanEck Video

0.21

Correlation Coefficient

ETRACS 2xMonthly  VanEck Video

Modest diversification

The 3 months correlation between ETRACS and VanEck is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding ETRACS 2xMonthly Pay and VanEck Video Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Video Gaming and ETRACS 2xMonthly 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 ETRACS 2xMonthly Pay are associated (or correlated) with VanEck Video. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Video Gaming has no effect on the direction of ETRACS 2xMonthly i.e., ETRACS 2xMonthly and VanEck Video go up and down completely randomly.

Pair Corralation between ETRACS 2xMonthly and VanEck Video

Given the investment horizon of 90 days ETRACS 2xMonthly is expected to generate 4.33 times less return on investment than VanEck Video. In addition to that, ETRACS 2xMonthly is 1.12 times more volatile than VanEck Video Gaming. It trades about 0.02 of its total potential returns per unit of risk. VanEck Video Gaming is currently generating about 0.08 per unit of volatility. If you would invest  8,422  in VanEck Video Gaming on December 21, 2024 and sell it today you would earn a total of  491.00  from holding VanEck Video Gaming or generate 5.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

ETRACS 2xMonthly Pay  vs.  VanEck Video Gaming

ETRACS 2xMonthly Pay

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ETRACS 2xMonthly Pay are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, ETRACS 2xMonthly is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

VanEck Video Gaming

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Video Gaming are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, VanEck Video may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with ETRACS 2xMonthly and VanEck Video

The main advantage of trading using opposite ETRACS 2xMonthly and VanEck Video positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETRACS 2xMonthly position performs unexpectedly, VanEck Video 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 Video will offset losses from the drop in VanEck Video's long position.

The idea behind ETRACS 2xMonthly Pay and VanEck Video Gaming 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.