Correlation Between VanEck Vectors and 2023 ETF

Can any of the company-specific risk be diversified away by investing in both VanEck Vectors and 2023 ETF 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 2023 ETF 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 The 2023 ETF, you can compare the effects of market volatilities on VanEck Vectors and 2023 ETF 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 2023 ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Vectors and 2023 ETF.

Diversification Opportunities for VanEck Vectors and 2023 ETF

0.45

Correlation Coefficient

VanEck Vectors  2023 ETF

Very weak diversification

The 3 months correlation between VanEck and 2023 is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Vectors ETF and The 2023 ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 2023 ETF 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 2023 ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 2023 ETF has no effect on the direction of VanEck Vectors i.e., VanEck Vectors and 2023 ETF go up and down completely randomly.

Pair Corralation between VanEck Vectors and 2023 ETF

Considering the 90-day investment horizon VanEck Vectors ETF is expected to under-perform the 2023 ETF. But the etf apears to be less risky and, when comparing its historical volatility, VanEck Vectors ETF is 3.36 times less risky than 2023 ETF. The etf trades about -0.06 of its potential returns per unit of risk. The The 2023 ETF is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,296  in The 2023 ETF on December 29, 2024 and sell it today you would earn a total of  78.73  from holding The 2023 ETF or generate 3.43% 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.  The 2023 ETF

VanEck Vectors ETF

Risk-Adjusted Performance

Very Weak

Over the last 90 days VanEck Vectors ETF has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

2023 ETF

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The 2023 ETF are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, 2023 ETF is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with VanEck Vectors and 2023 ETF

The main advantage of trading using opposite VanEck Vectors and 2023 ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Vectors position performs unexpectedly, 2023 ETF 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 2023 ETF will offset losses from the drop in 2023 ETF's long position.

The idea behind VanEck Vectors ETF and The 2023 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.