Correlation Between VanEck Steel and Global X

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

Diversification Opportunities for VanEck Steel and Global X

-0.31

Correlation Coefficient

VanEck Steel  Global X

Very good diversification

The 3 months correlation between VanEck and Global is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Steel ETF and Global X Uranium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Uranium 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 Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Uranium has no effect on the direction of VanEck Steel i.e., VanEck Steel and Global X go up and down completely randomly.

Pair Corralation between VanEck Steel and Global X

Considering the 90-day investment horizon VanEck Steel ETF is expected to generate 0.5 times more return on investment than Global X. However, VanEck Steel ETF is 1.98 times less risky than Global X. It trades about 0.12 of its potential returns per unit of risk. Global X Uranium is currently generating about -0.06 per unit of risk. If you would invest  5,828  in VanEck Steel ETF on December 27, 2024 and sell it today you would earn a total of  571.00  from holding VanEck Steel ETF or generate 9.8% return on investment over 90 days.

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

VanEck Steel ETF  vs.  Global X Uranium

VanEck Steel ETF

Risk-Adjusted Performance

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 unsteady essential indicators, VanEck Steel may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Global X Uranium

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global X Uranium has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Etf's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Pair Trading with VanEck Steel and Global X

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

The idea behind VanEck Steel ETF and Global X Uranium 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.

Check out your portfolio center.

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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .