Correlation Between VanEck China and VanEck JP
Can any of the company-specific risk be diversified away by investing in both VanEck China and VanEck JP 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 China and VanEck JP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VanEck China Bond and VanEck JP Morgan, you can compare the effects of market volatilities on VanEck China and VanEck JP 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 China with a short position of VanEck JP. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck China and VanEck JP.
Diversification Opportunities for VanEck China and VanEck JP
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between VanEck and VanEck is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding VanEck China Bond and VanEck JP Morgan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck JP Morgan and VanEck China 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 China Bond are associated (or correlated) with VanEck JP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck JP Morgan has no effect on the direction of VanEck China i.e., VanEck China and VanEck JP go up and down completely randomly.
Pair Corralation between VanEck China and VanEck JP
Given the investment horizon of 90 days VanEck China is expected to generate 1.7 times less return on investment than VanEck JP. But when comparing it to its historical volatility, VanEck China Bond is 1.8 times less risky than VanEck JP. It trades about 0.04 of its potential returns per unit of risk. VanEck JP Morgan is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,168 in VanEck JP Morgan on August 23, 2024 and sell it today you would earn a total of 208.00 from holding VanEck JP Morgan or generate 9.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
VanEck China Bond vs. VanEck JP Morgan
Performance |
| Timeline |
| VanEck China Bond |
| VanEck JP Morgan |
VanEck China and VanEck JP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VanEck China and VanEck JP
The main advantage of trading using opposite VanEck China and VanEck JP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck China position performs unexpectedly, VanEck JP 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 JP will offset losses from the drop in VanEck JP's long position.| VanEck China vs. Valued Advisers Trust | VanEck China vs. Xtrackers California Municipal | VanEck China vs. Principal Exchange Traded Funds | VanEck China vs. PIMCO Enhanced Short |
| VanEck JP vs. Schwab Fundamental International | VanEck JP vs. Xtrackers International Real | VanEck JP vs. Schwab Fundamental Small | VanEck JP vs. Schwab Fundamental Emerging |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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