Correlation Between Volatility Shares and VanEck China
Can any of the company-specific risk be diversified away by investing in both Volatility Shares and VanEck China 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 Volatility Shares and VanEck China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Volatility Shares Trust and VanEck China Bond, you can compare the effects of market volatilities on Volatility Shares and VanEck China 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 Volatility Shares with a short position of VanEck China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volatility Shares and VanEck China.
Diversification Opportunities for Volatility Shares and VanEck China
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Volatility and VanEck is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Volatility Shares Trust and VanEck China Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck China Bond and Volatility Shares 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 Volatility Shares Trust are associated (or correlated) with VanEck China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck China Bond has no effect on the direction of Volatility Shares i.e., Volatility Shares and VanEck China go up and down completely randomly.
Pair Corralation between Volatility Shares and VanEck China
Given the investment horizon of 90 days Volatility Shares Trust is expected to generate 24.34 times more return on investment than VanEck China. However, Volatility Shares is 24.34 times more volatile than VanEck China Bond. It trades about 0.09 of its potential returns per unit of risk. VanEck China Bond is currently generating about 0.04 per unit of risk. If you would invest 2,356 in Volatility Shares Trust on November 5, 2024 and sell it today you would earn a total of 3,514 from holding Volatility Shares Trust or generate 149.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.59% |
| Values | Daily Returns |
Volatility Shares Trust vs. VanEck China Bond
Performance |
| Timeline |
| Volatility Shares Trust |
| VanEck China Bond |
Volatility Shares and VanEck China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volatility Shares and VanEck China
The main advantage of trading using opposite Volatility Shares and VanEck China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volatility Shares position performs unexpectedly, VanEck China 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 China will offset losses from the drop in VanEck China's long position.| Volatility Shares vs. ProShares Trust | Volatility Shares vs. iShares Ethereum Trust | Volatility Shares vs. ProShares Trust | Volatility Shares vs. Grayscale Ethereum Trust |
| VanEck China vs. VanEck Vectors Moodys | VanEck China vs. Valued Advisers Trust | VanEck China vs. Xtrackers California Municipal | VanEck China vs. Principal Exchange Traded Funds |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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