Correlation Between VanEck Vectors and Nine Energy

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

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

Diversification Opportunities for VanEck Vectors and Nine Energy

0.53

Correlation Coefficient

VanEck Vectors  Nine Energy

Very weak diversification

The 3 months correlation between VanEck and Nine is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Vectors ETF and Nine Energy Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nine Energy Service and VanEck Vectors 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 Vectors ETF are associated (or correlated) with Nine Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nine Energy Service has no effect on the direction of VanEck Vectors i.e., VanEck Vectors and Nine Energy go up and down completely randomly.

Pair Corralation between VanEck Vectors and Nine Energy

Considering the 90-day investment horizon VanEck Vectors is expected to generate 77.93 times less return on investment than Nine Energy. But when comparing it to its historical volatility, VanEck Vectors ETF is 27.35 times less risky than Nine Energy. It trades about 0.02 of its potential returns per unit of risk. Nine Energy Service is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  108.00  in Nine Energy Service on September 12, 2024 and sell it today you would earn a total of  13.50  from holding Nine Energy Service or generate 12.5% return on investment over 90 days.

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

VanEck Vectors ETF  vs.  Nine Energy Service

VanEck Vectors ETF

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Vectors ETF are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong primary indicators, VanEck Vectors is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Nine Energy Service

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nine Energy Service are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Nine Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VanEck Vectors and Nine Energy

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

The idea behind VanEck Vectors ETF and Nine Energy Service 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.