Correlation Between VanEck Low and AB Disruptors

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

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

Diversification Opportunities for VanEck Low and AB Disruptors

-0.11

Correlation Coefficient

VanEck Low  AB Disruptors

Good diversification

The 3 months correlation between VanEck and FWD is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Low Carbon and AB Disruptors ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB Disruptors ETF and VanEck Low 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 Low Carbon are associated (or correlated) with AB Disruptors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB Disruptors ETF has no effect on the direction of VanEck Low i.e., VanEck Low and AB Disruptors go up and down completely randomly.

Pair Corralation between VanEck Low and AB Disruptors

Given the investment horizon of 90 days VanEck Low Carbon is expected to under-perform the AB Disruptors. But the etf apears to be less risky and, when comparing its historical volatility, VanEck Low Carbon is 1.01 times less risky than AB Disruptors. The etf trades about -0.12 of its potential returns per unit of risk. The AB Disruptors ETF is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  8,224  in AB Disruptors ETF on October 25, 2024 and sell it today you would earn a total of  476.00  from holding AB Disruptors ETF or generate 5.79% return on investment over 90 days.

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

VanEck Low Carbon  vs.  AB Disruptors ETF

VanEck Low Carbon

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VanEck Low Carbon has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, VanEck Low is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

AB Disruptors ETF

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AB Disruptors ETF are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, AB Disruptors may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with VanEck Low and AB Disruptors

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

The idea behind VanEck Low Carbon and AB Disruptors 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.