Correlation Between VanEck TRON and Vanguard

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

By analyzing existing cross correlation between VanEck TRON ETN and Vanguard SP 500, you can compare the effects of market volatilities on VanEck TRON and Vanguard 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 TRON with a short position of Vanguard. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck TRON and Vanguard.

Diversification Opportunities for VanEck TRON and Vanguard

0.61

Correlation Coefficient

VanEck TRON  Vanguard

Poor diversification

The 3 months correlation between VanEck and Vanguard is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding VanEck TRON ETN and Vanguard SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard SP 500 and VanEck 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 VanEck TRON ETN are associated (or correlated) with Vanguard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard SP 500 has no effect on the direction of VanEck TRON i.e., VanEck TRON and Vanguard go up and down completely randomly.

Pair Corralation between VanEck TRON and Vanguard

Assuming the 90 days trading horizon VanEck TRON ETN is expected to generate 14.04 times more return on investment than Vanguard. However, VanEck TRON is 14.04 times more volatile than Vanguard SP 500. It trades about 0.1 of its potential returns per unit of risk. Vanguard SP 500 is currently generating about 0.17 per unit of risk. If you would invest  1,748  in VanEck TRON ETN on October 26, 2024 and sell it today you would earn a total of  928.00  from holding VanEck TRON ETN or generate 53.09% return on investment over 90 days.

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

VanEck TRON ETN  vs.  Vanguard SP 500

VanEck TRON ETN

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck TRON ETN are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, VanEck TRON unveiled solid returns over the last few months and may actually be approaching a breakup point.

Vanguard SP 500

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard SP 500 are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Vanguard may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with VanEck TRON and Vanguard

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

The idea behind VanEck TRON ETN and Vanguard SP 500 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.

Check out your portfolio center.

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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.