Correlation Between AXS 2X and VanEck China

Can any of the company-specific risk be diversified away by investing in both AXS 2X and VanEck China 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 AXS 2X and VanEck China into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AXS 2X Innovation and VanEck China Bond, you can compare the effects of market volatilities on AXS 2X and VanEck China 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 AXS 2X with a short position of VanEck China. Check out your portfolio center. Please also check ongoing floating volatility patterns of AXS 2X and VanEck China.

Diversification Opportunities for AXS 2X and VanEck China

-0.15

Correlation Coefficient

AXS 2X  VanEck China

Good diversification

The 3 months correlation between AXS and VanEck is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding AXS 2X Innovation and VanEck China Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck China Bond and AXS 2X 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 AXS 2X Innovation are associated (or correlated) with VanEck China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck China Bond has no effect on the direction of AXS 2X i.e., AXS 2X and VanEck China go up and down completely randomly.

Pair Corralation between AXS 2X and VanEck China

Given the investment horizon of 90 days AXS 2X Innovation is expected to under-perform the VanEck China. In addition to that, AXS 2X is 19.14 times more volatile than VanEck China Bond. It trades about -0.06 of its total potential returns per unit of risk. VanEck China Bond is currently generating about 0.01 per unit of volatility. If you would invest  2,199  in VanEck China Bond on December 28, 2024 and sell it today you would earn a total of  4.00  from holding VanEck China Bond or generate 0.18% return on investment over 90 days.

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

AXS 2X Innovation  vs.  VanEck China Bond

AXS 2X Innovation

Risk-Adjusted Performance

Very Weak

Over the last 90 days AXS 2X Innovation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Etf's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the ETF venture institutional investors.

VanEck China Bond

Risk-Adjusted Performance

Very Weak

Over the last 90 days VanEck China Bond has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, VanEck China is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with AXS 2X and VanEck China

The main advantage of trading using opposite AXS 2X and VanEck China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AXS 2X position performs unexpectedly, VanEck China 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 China will offset losses from the drop in VanEck China's long position.

The idea behind AXS 2X Innovation and VanEck China Bond 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.