Correlation Between VanEck Semiconductor and ETF Series

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

Diversification Opportunities for VanEck Semiconductor and ETF Series

0.86

Correlation Coefficient

VanEck Semiconductor  ETF Series

Very poor diversification

The 3 months correlation between VanEck and ETF is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Semiconductor ETF and ETF Series Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETF Series Solutions 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 ETF Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETF Series Solutions has no effect on the direction of VanEck Semiconductor i.e., VanEck Semiconductor and ETF Series go up and down completely randomly.

Pair Corralation between VanEck Semiconductor and ETF Series

Considering the 90-day investment horizon VanEck Semiconductor ETF is expected to under-perform the ETF Series. In addition to that, VanEck Semiconductor is 1.38 times more volatile than ETF Series Solutions. It trades about -0.06 of its total potential returns per unit of risk. ETF Series Solutions is currently generating about -0.05 per unit of volatility. If you would invest  3,881  in ETF Series Solutions on December 27, 2024 and sell it today you would lose (244.00) from holding ETF Series Solutions or give up 6.29% of portfolio value over 90 days.

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

VanEck Semiconductor ETF  vs.  ETF Series Solutions

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 latest weak performance, the Etf's primary indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the Etf traders.

ETF Series Solutions

Risk-Adjusted Performance

Very Weak

Over the last 90 days ETF Series Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, ETF Series 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 ETF Series

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

The idea behind VanEck Semiconductor ETF and ETF Series Solutions 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.