Correlation Between VanEck Biotech and Global X
Can any of the company-specific risk be diversified away by investing in both VanEck Biotech and Global X 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 Biotech and Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VanEck Biotech ETF and Global X Clean, you can compare the effects of market volatilities on VanEck Biotech and Global X 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 Biotech with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Biotech and Global X.
Diversification Opportunities for VanEck Biotech and Global X
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between VanEck and Global is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Biotech ETF and Global X Clean in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Clean and VanEck Biotech 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 Biotech ETF are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Clean has no effect on the direction of VanEck Biotech i.e., VanEck Biotech and Global X go up and down completely randomly.
Pair Corralation between VanEck Biotech and Global X
Considering the 90-day investment horizon VanEck Biotech is expected to generate 12.36 times less return on investment than Global X. In addition to that, VanEck Biotech is 1.13 times more volatile than Global X Clean. It trades about 0.01 of its total potential returns per unit of risk. Global X Clean is currently generating about 0.09 per unit of volatility. If you would invest 1,572 in Global X Clean on August 28, 2024 and sell it today you would earn a total of 266.00 from holding Global X Clean or generate 16.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.52% |
| Values | Daily Returns |
VanEck Biotech ETF vs. Global X Clean
Performance |
| Timeline |
| VanEck Biotech ETF |
| Global X Clean |
VanEck Biotech and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VanEck Biotech and Global X
The main advantage of trading using opposite VanEck Biotech and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Biotech position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X's long position.| VanEck Biotech vs. Global X Clean | VanEck Biotech vs. Global X Renewable | VanEck Biotech vs. Global X Thematic | VanEck Biotech vs. Global X AgTech |
| Global X vs. Global X Renewable | Global X vs. Global X AgTech | Global X vs. First Trust Water | Global X vs. Global X Aging |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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