Correlation Between VanEck Sustainable and VanEck Vectors

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

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

Diversification Opportunities for VanEck Sustainable and VanEck Vectors

-0.29

Correlation Coefficient

VanEck Sustainable  VanEck Vectors

Very good diversification

The 3 months correlation between VanEck and VanEck is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Sustainable European and VanEck Vectors UCITS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Vectors UCITS and VanEck Sustainable 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 Sustainable European are associated (or correlated) with VanEck Vectors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Vectors UCITS has no effect on the direction of VanEck Sustainable i.e., VanEck Sustainable and VanEck Vectors go up and down completely randomly.

Pair Corralation between VanEck Sustainable and VanEck Vectors

Assuming the 90 days trading horizon VanEck Sustainable European is expected to under-perform the VanEck Vectors. In addition to that, VanEck Sustainable is 1.26 times more volatile than VanEck Vectors UCITS. It trades about -0.08 of its total potential returns per unit of risk. VanEck Vectors UCITS is currently generating about 0.15 per unit of volatility. If you would invest  11,790  in VanEck Vectors UCITS on October 11, 2024 and sell it today you would earn a total of  160.00  from holding VanEck Vectors UCITS or generate 1.36% return on investment over 90 days.

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

VanEck Sustainable European  vs.  VanEck Vectors UCITS

VanEck Sustainable

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VanEck Sustainable European has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, VanEck Sustainable is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

VanEck Vectors UCITS

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Vectors UCITS are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, VanEck Vectors may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with VanEck Sustainable and VanEck Vectors

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

The idea behind VanEck Sustainable European and VanEck Vectors UCITS 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.