Correlation Between SEVEN GROUP and VanEck FTSE

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

By analyzing existing cross correlation between SEVEN GROUP HOLDINGS and VanEck FTSE Global, you can compare the effects of market volatilities on SEVEN GROUP and VanEck FTSE 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 SEVEN GROUP with a short position of VanEck FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEVEN GROUP and VanEck FTSE.

Diversification Opportunities for SEVEN GROUP and VanEck FTSE

0.46

Correlation Coefficient

SEVEN GROUP  VanEck FTSE

Very weak diversification

The 3 months correlation between SEVEN and VanEck is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding SEVEN GROUP HOLDINGS and VanEck FTSE Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck FTSE Global and SEVEN GROUP 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 SEVEN GROUP HOLDINGS are associated (or correlated) with VanEck FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck FTSE Global has no effect on the direction of SEVEN GROUP i.e., SEVEN GROUP and VanEck FTSE go up and down completely randomly.

Pair Corralation between SEVEN GROUP and VanEck FTSE

Assuming the 90 days trading horizon SEVEN GROUP HOLDINGS is expected to under-perform the VanEck FTSE. In addition to that, SEVEN GROUP is 1.77 times more volatile than VanEck FTSE Global. It trades about -0.28 of its total potential returns per unit of risk. VanEck FTSE Global is currently generating about -0.46 per unit of volatility. If you would invest  2,260  in VanEck FTSE Global on September 23, 2024 and sell it today you would lose (140.00) from holding VanEck FTSE Global or give up 6.19% of portfolio value over 90 days.

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

SEVEN GROUP HOLDINGS  vs.  VanEck FTSE Global

SEVEN GROUP HOLDINGS

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SEVEN GROUP HOLDINGS are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, SEVEN GROUP may actually be approaching a critical reversion point that can send shares even higher in January 2025.

VanEck FTSE Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VanEck FTSE Global has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, VanEck FTSE is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with SEVEN GROUP and VanEck FTSE

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

The idea behind SEVEN GROUP HOLDINGS and VanEck FTSE Global 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.