Correlation Between Vanguard Information and VanEck Semiconductor

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

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

Diversification Opportunities for Vanguard Information and VanEck Semiconductor

0.94

Correlation Coefficient

Vanguard Information  VanEck Semiconductor

Almost no diversification

The 3 months correlation between Vanguard and VanEck is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Information Technolog and VanEck Semiconductor ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Semiconductor ETF and Vanguard Information 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 Vanguard Information Technology are associated (or correlated) with VanEck Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Semiconductor ETF has no effect on the direction of Vanguard Information i.e., Vanguard Information and VanEck Semiconductor go up and down completely randomly.

Pair Corralation between Vanguard Information and VanEck Semiconductor

Considering the 90-day investment horizon Vanguard Information Technology is expected to under-perform the VanEck Semiconductor. But the etf apears to be less risky and, when comparing its historical volatility, Vanguard Information Technology is 1.41 times less risky than VanEck Semiconductor. The etf trades about -0.12 of its potential returns per unit of risk. The VanEck Semiconductor ETF is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  24,466  in VanEck Semiconductor ETF on December 28, 2024 and sell it today you would lose (3,249) from holding VanEck Semiconductor ETF or give up 13.28% of portfolio value over 90 days.

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

Vanguard Information Technolog  vs.  VanEck Semiconductor ETF

Vanguard Information

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vanguard Information Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Etf's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

VanEck Semiconductor ETF

Risk-Adjusted Performance

Very Weak

Over the last 90 days VanEck Semiconductor ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Etf's primary indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the Etf traders.

Pair Trading with Vanguard Information and VanEck Semiconductor

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

The idea behind Vanguard Information Technology and VanEck Semiconductor 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.