Correlation Between VanEck Semiconductor and ProShares Metaverse

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

Diversification Opportunities for VanEck Semiconductor and ProShares Metaverse

0.41

Correlation Coefficient

VanEck Semiconductor  ProShares Metaverse

Very weak diversification

The 3 months correlation between VanEck and ProShares is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Semiconductor ETF and ProShares Metaverse ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Metaverse ETF 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 ProShares Metaverse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Metaverse ETF has no effect on the direction of VanEck Semiconductor i.e., VanEck Semiconductor and ProShares Metaverse go up and down completely randomly.

Pair Corralation between VanEck Semiconductor and ProShares Metaverse

Considering the 90-day investment horizon VanEck Semiconductor is expected to generate 4.4 times less return on investment than ProShares Metaverse. In addition to that, VanEck Semiconductor is 1.54 times more volatile than ProShares Metaverse ETF. It trades about 0.03 of its total potential returns per unit of risk. ProShares Metaverse ETF is currently generating about 0.21 per unit of volatility. If you would invest  4,264  in ProShares Metaverse ETF on September 12, 2024 and sell it today you would earn a total of  684.00  from holding ProShares Metaverse ETF or generate 16.04% return on investment over 90 days.

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

VanEck Semiconductor ETF  vs.  ProShares Metaverse ETF

VanEck Semiconductor ETF

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Semiconductor ETF are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

ProShares Metaverse ETF

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Metaverse ETF are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, ProShares Metaverse unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VanEck Semiconductor and ProShares Metaverse

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

The idea behind VanEck Semiconductor ETF and ProShares Metaverse ETF 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.