Correlation Between TRON and VanEck Defense

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

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

Diversification Opportunities for TRON and VanEck Defense

-0.57

Correlation Coefficient

TRON  VanEck Defense

Excellent diversification

The 3 months correlation between TRON and VanEck is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding TRON and VanEck Defense ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Defense ETF and TRON 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 TRON are associated (or correlated) with VanEck Defense. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Defense ETF has no effect on the direction of TRON i.e., TRON and VanEck Defense go up and down completely randomly.

Pair Corralation between TRON and VanEck Defense

Assuming the 90 days trading horizon TRON is expected to under-perform the VanEck Defense. In addition to that, TRON is 2.29 times more volatile than VanEck Defense ETF. It trades about -0.03 of its total potential returns per unit of risk. VanEck Defense ETF is currently generating about 0.23 per unit of volatility. If you would invest  3,620  in VanEck Defense ETF on December 21, 2024 and sell it today you would earn a total of  898.00  from holding VanEck Defense ETF or generate 24.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.83%
Values	Daily Returns

TRON  vs.  VanEck Defense ETF

TRON

Risk-Adjusted Performance

Very Weak

Over the last 90 days TRON has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Crypto's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for TRON shareholders.

VanEck Defense ETF

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Defense ETF are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, VanEck Defense unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TRON and VanEck Defense

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

The idea behind TRON and VanEck Defense ETF 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.