Correlation Between VanEck IBoxx and VanEck Polkadot

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

By analyzing existing cross correlation between VanEck iBoxx EUR and VanEck Polkadot ETN, you can compare the effects of market volatilities on VanEck IBoxx and VanEck Polkadot 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 IBoxx with a short position of VanEck Polkadot. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck IBoxx and VanEck Polkadot.

Diversification Opportunities for VanEck IBoxx and VanEck Polkadot

0.66

Correlation Coefficient

VanEck IBoxx  VanEck Polkadot

Poor diversification

The 3 months correlation between VanEck and VanEck is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding VanEck iBoxx EUR and VanEck Polkadot ETN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Polkadot ETN and VanEck IBoxx 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 iBoxx EUR are associated (or correlated) with VanEck Polkadot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Polkadot ETN has no effect on the direction of VanEck IBoxx i.e., VanEck IBoxx and VanEck Polkadot go up and down completely randomly.

Pair Corralation between VanEck IBoxx and VanEck Polkadot

Assuming the 90 days trading horizon VanEck IBoxx is expected to generate 305.5 times less return on investment than VanEck Polkadot. But when comparing it to its historical volatility, VanEck iBoxx EUR is 26.86 times less risky than VanEck Polkadot. It trades about 0.01 of its potential returns per unit of risk. VanEck Polkadot ETN is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  146.00  in VanEck Polkadot ETN on September 12, 2024 and sell it today you would earn a total of  101.00  from holding VanEck Polkadot ETN or generate 69.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

VanEck iBoxx EUR  vs.  VanEck Polkadot ETN

VanEck iBoxx EUR

Risk-Adjusted Performance

0 of 100

Very Weak

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

VanEck Polkadot ETN

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Polkadot ETN are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, VanEck Polkadot unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VanEck IBoxx and VanEck Polkadot

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

The idea behind VanEck iBoxx EUR and VanEck Polkadot ETN 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.