Correlation Between Van Dien and SSIAM VNX50

Can any of the company-specific risk be diversified away by investing in both Van Dien and SSIAM VNX50 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 Van Dien and SSIAM VNX50 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Van Dien Fused and SSIAM VNX50 ETF, you can compare the effects of market volatilities on Van Dien and SSIAM VNX50 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 Van Dien with a short position of SSIAM VNX50. Check out your portfolio center. Please also check ongoing floating volatility patterns of Van Dien and SSIAM VNX50.

Diversification Opportunities for Van Dien and SSIAM VNX50

0.11

Correlation Coefficient

Van Dien  SSIAM VNX50

Average diversification

The 3 months correlation between Van and SSIAM is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Van Dien Fused and SSIAM VNX50 ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSIAM VNX50 ETF and Van Dien 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 Van Dien Fused are associated (or correlated) with SSIAM VNX50. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSIAM VNX50 ETF has no effect on the direction of Van Dien i.e., Van Dien and SSIAM VNX50 go up and down completely randomly.

Pair Corralation between Van Dien and SSIAM VNX50

Assuming the 90 days trading horizon Van Dien Fused is expected to generate 6.75 times more return on investment than SSIAM VNX50. However, Van Dien is 6.75 times more volatile than SSIAM VNX50 ETF. It trades about 0.16 of its potential returns per unit of risk. SSIAM VNX50 ETF is currently generating about 0.09 per unit of risk. If you would invest  1,335,000  in Van Dien Fused on December 21, 2024 and sell it today you would earn a total of  360,000  from holding Van Dien Fused or generate 26.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	62.71%
Values	Daily Returns

Van Dien Fused  vs.  SSIAM VNX50 ETF

Van Dien Fused

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Van Dien Fused are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Van Dien displayed solid returns over the last few months and may actually be approaching a breakup point.

SSIAM VNX50 ETF

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SSIAM VNX50 ETF are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, SSIAM VNX50 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Van Dien and SSIAM VNX50

The main advantage of trading using opposite Van Dien and SSIAM VNX50 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Van Dien position performs unexpectedly, SSIAM VNX50 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 SSIAM VNX50 will offset losses from the drop in SSIAM VNX50's long position.

The idea behind Van Dien Fused and SSIAM VNX50 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.