Correlation Between Russell Australian and VanEck Global

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

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

Diversification Opportunities for Russell Australian and VanEck Global

-0.21

Correlation Coefficient

Russell Australian  VanEck Global

Very good diversification

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

Pair Corralation between Russell Australian and VanEck Global

Assuming the 90 days trading horizon Russell Australian SemiGovernment is expected to under-perform the VanEck Global. But the etf apears to be less risky and, when comparing its historical volatility, Russell Australian SemiGovernment is 3.3 times less risky than VanEck Global. The etf trades about -0.05 of its potential returns per unit of risk. The VanEck Global Listed is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  2,202  in VanEck Global Listed on September 15, 2024 and sell it today you would earn a total of  399.00  from holding VanEck Global Listed or generate 18.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.48%
Values	Daily Returns

Russell Australian SemiGovernm  vs.  VanEck Global Listed

Russell Australian

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Russell Australian SemiGovernment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, Russell Australian is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

VanEck Global Listed

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days VanEck Global Listed has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively weak basic indicators, VanEck Global unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Russell Australian and VanEck Global

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

The idea behind Russell Australian SemiGovernment and VanEck Global Listed 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.