Correlation Between VanEck Sustainable and Xtrackers

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

Diversification Opportunities for VanEck Sustainable and Xtrackers

0.59

Correlation Coefficient

VanEck Sustainable  Xtrackers

Very weak diversification

The 3 months correlation between VanEck and Xtrackers is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Sustainable European and Xtrackers II in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers II 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 Xtrackers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers II has no effect on the direction of VanEck Sustainable i.e., VanEck Sustainable and Xtrackers go up and down completely randomly.

Pair Corralation between VanEck Sustainable and Xtrackers

Assuming the 90 days trading horizon VanEck Sustainable European is expected to under-perform the Xtrackers. But the etf apears to be less risky and, when comparing its historical volatility, VanEck Sustainable European is 2.44 times less risky than Xtrackers. The etf trades about -0.11 of its potential returns per unit of risk. The Xtrackers II is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  751.00  in Xtrackers II on September 28, 2024 and sell it today you would earn a total of  3.00  from holding Xtrackers II or generate 0.4% return on investment over 90 days.

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

VanEck Sustainable European  vs.  Xtrackers II

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 current stock price tumult, may contribute to shorter-term losses for the shareholders.

Xtrackers II

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xtrackers II has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Xtrackers is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with VanEck Sustainable and Xtrackers

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

The idea behind VanEck Sustainable European and Xtrackers II 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.