Correlation Between Global Resources and VanEck Gaming

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

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

Diversification Opportunities for Global Resources and VanEck Gaming

0.66

Correlation Coefficient

Global Resources  VanEck Gaming

Poor diversification

The 3 months correlation between Global and VanEck is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Global Resources Fund and VanEck Gaming ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Gaming ETF and Global Resources 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 Global Resources Fund are associated (or correlated) with VanEck Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Gaming ETF has no effect on the direction of Global Resources i.e., Global Resources and VanEck Gaming go up and down completely randomly.

Pair Corralation between Global Resources and VanEck Gaming

Assuming the 90 days horizon Global Resources Fund is expected to generate 0.84 times more return on investment than VanEck Gaming. However, Global Resources Fund is 1.18 times less risky than VanEck Gaming. It trades about 0.26 of its potential returns per unit of risk. VanEck Gaming ETF is currently generating about -0.09 per unit of risk. If you would invest  367.00  in Global Resources Fund on October 26, 2024 and sell it today you would earn a total of  14.00  from holding Global Resources Fund or generate 3.81% return on investment over 90 days.

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

Global Resources Fund  vs.  VanEck Gaming ETF

Global Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Resources Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Global Resources is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

VanEck Gaming ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VanEck Gaming ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest sluggish performance, the Etf's forward-looking indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the ETF venture institutional investors.

Pair Trading with Global Resources and VanEck Gaming

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

The idea behind Global Resources Fund and VanEck Gaming 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.