Correlation Between VanEck IBoxx and VanEck Hydrogen

Can any of the company-specific risk be diversified away by investing in both VanEck IBoxx and VanEck Hydrogen 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 Hydrogen 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 Hydrogen Economy, you can compare the effects of market volatilities on VanEck IBoxx and VanEck Hydrogen 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 Hydrogen. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck IBoxx and VanEck Hydrogen.

Diversification Opportunities for VanEck IBoxx and VanEck Hydrogen

-0.44

Correlation Coefficient

VanEck IBoxx  VanEck Hydrogen

Very good diversification

The 3 months correlation between VanEck and VanEck is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding VanEck iBoxx EUR and VanEck Hydrogen Economy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Hydrogen Economy 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 Hydrogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Hydrogen Economy has no effect on the direction of VanEck IBoxx i.e., VanEck IBoxx and VanEck Hydrogen go up and down completely randomly.

Pair Corralation between VanEck IBoxx and VanEck Hydrogen

Assuming the 90 days trading horizon VanEck iBoxx EUR is expected to under-perform the VanEck Hydrogen. But the etf apears to be less risky and, when comparing its historical volatility, VanEck iBoxx EUR is 1.08 times less risky than VanEck Hydrogen. The etf trades about -0.06 of its potential returns per unit of risk. The VanEck Hydrogen Economy is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  496.00  in VanEck Hydrogen Economy on September 14, 2024 and sell it today you would earn a total of  21.00  from holding VanEck Hydrogen Economy or generate 4.23% return on investment over 90 days.

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

VanEck iBoxx EUR  vs.  VanEck Hydrogen Economy

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 fairly stable basic indicators, VanEck IBoxx is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

VanEck Hydrogen Economy

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Hydrogen Economy are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, VanEck Hydrogen is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with VanEck IBoxx and VanEck Hydrogen

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

The idea behind VanEck iBoxx EUR and VanEck Hydrogen Economy 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.