Correlation Between IShares Semiconductor and VanEck Video

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

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

Diversification Opportunities for IShares Semiconductor and VanEck Video

-0.25

Correlation Coefficient

IShares Semiconductor  VanEck Video

Very good diversification

The 3 months correlation between IShares and VanEck is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding iShares Semiconductor ETF and VanEck Video Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Video Gaming and IShares 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 iShares Semiconductor ETF are associated (or correlated) with VanEck Video. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Video Gaming has no effect on the direction of IShares Semiconductor i.e., IShares Semiconductor and VanEck Video go up and down completely randomly.

Pair Corralation between IShares Semiconductor and VanEck Video

Given the investment horizon of 90 days IShares Semiconductor is expected to generate 4.34 times less return on investment than VanEck Video. In addition to that, IShares Semiconductor is 1.19 times more volatile than VanEck Video Gaming. It trades about 0.03 of its total potential returns per unit of risk. VanEck Video Gaming is currently generating about 0.16 per unit of volatility. If you would invest  7,302  in VanEck Video Gaming on October 24, 2024 and sell it today you would earn a total of  1,093  from holding VanEck Video Gaming or generate 14.97% return on investment over 90 days.

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

iShares Semiconductor ETF  vs.  VanEck Video Gaming

iShares Semiconductor ETF

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Semiconductor ETF are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, IShares Semiconductor is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

VanEck Video Gaming

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Video Gaming are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, VanEck Video displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares Semiconductor and VanEck Video

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

The idea behind iShares Semiconductor ETF and VanEck Video Gaming 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.