Correlation Between VanEck Steel and Mast Global

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

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

Diversification Opportunities for VanEck Steel and Mast Global

0.74

Correlation Coefficient

VanEck Steel  Mast Global

Poor diversification

The 3 months correlation between VanEck and Mast is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Steel ETF and Mast Global Battery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mast Global Battery and VanEck Steel 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 Steel ETF are associated (or correlated) with Mast Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mast Global Battery has no effect on the direction of VanEck Steel i.e., VanEck Steel and Mast Global go up and down completely randomly.

Pair Corralation between VanEck Steel and Mast Global

Considering the 90-day investment horizon VanEck Steel ETF is expected to generate 1.3 times more return on investment than Mast Global. However, VanEck Steel is 1.3 times more volatile than Mast Global Battery. It trades about 0.15 of its potential returns per unit of risk. Mast Global Battery is currently generating about -0.01 per unit of risk. If you would invest  6,741  in VanEck Steel ETF on September 2, 2024 and sell it today you would earn a total of  390.00  from holding VanEck Steel ETF or generate 5.79% return on investment over 90 days.

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

VanEck Steel ETF  vs.  Mast Global Battery

VanEck Steel ETF

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Steel ETF are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal essential indicators, VanEck Steel may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Mast Global Battery

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mast Global Battery are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Mast Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with VanEck Steel and Mast Global

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

The idea behind VanEck Steel ETF and Mast Global Battery 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.