Correlation Between VanEck Semiconductor and IShares

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

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

Diversification Opportunities for VanEck Semiconductor and IShares

0.0

Correlation Coefficient

VanEck Semiconductor  IShares

Pay attention - limited upside

The 3 months correlation between VanEck and IShares is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Semiconductor ETF and IShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IShares and VanEck Semiconductor 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 Semiconductor ETF are associated (or correlated) with IShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IShares has no effect on the direction of VanEck Semiconductor i.e., VanEck Semiconductor and IShares go up and down completely randomly.

Pair Corralation between VanEck Semiconductor and IShares

If you would invest (100.00) in IShares on December 19, 2024 and sell it today you would earn a total of  100.00  from holding IShares or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

VanEck Semiconductor ETF  vs.  IShares

VanEck Semiconductor ETF

Risk-Adjusted Performance

Very Weak

Over the last 90 days VanEck Semiconductor ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong primary indicators, VanEck Semiconductor is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

IShares

Risk-Adjusted Performance

Very Weak

Over the last 90 days IShares has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, IShares is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with VanEck Semiconductor and IShares

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

The idea behind VanEck Semiconductor ETF and IShares 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.