Correlation Between VanEck FTSE and VanEck Vectors
Can any of the company-specific risk be diversified away by investing in both VanEck FTSE and VanEck Vectors 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 FTSE and VanEck Vectors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VanEck FTSE China and VanEck Vectors Small, you can compare the effects of market volatilities on VanEck FTSE and VanEck Vectors 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 FTSE with a short position of VanEck Vectors. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck FTSE and VanEck Vectors.
Diversification Opportunities for VanEck FTSE and VanEck Vectors
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between VanEck and VanEck is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding VanEck FTSE China and VanEck Vectors Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Vectors Small and VanEck FTSE 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 FTSE China are associated (or correlated) with VanEck Vectors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Vectors Small has no effect on the direction of VanEck FTSE i.e., VanEck FTSE and VanEck Vectors go up and down completely randomly.
Pair Corralation between VanEck FTSE and VanEck Vectors
Assuming the 90 days trading horizon VanEck FTSE China is expected to generate 2.89 times more return on investment than VanEck Vectors. However, VanEck FTSE is 2.89 times more volatile than VanEck Vectors Small. It trades about 0.1 of its potential returns per unit of risk. VanEck Vectors Small is currently generating about 0.07 per unit of risk. If you would invest 4,755 in VanEck FTSE China on August 29, 2024 and sell it today you would earn a total of 743.00 from holding VanEck FTSE China or generate 15.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
VanEck FTSE China vs. VanEck Vectors Small
Performance |
| Timeline |
| VanEck FTSE China |
| VanEck Vectors Small |
VanEck FTSE and VanEck Vectors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VanEck FTSE and VanEck Vectors
The main advantage of trading using opposite VanEck FTSE and VanEck Vectors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck FTSE position performs unexpectedly, VanEck Vectors 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 Vectors will offset losses from the drop in VanEck Vectors' long position.| VanEck FTSE vs. Betashares Asia Technology | VanEck FTSE vs. CD Private Equity | VanEck FTSE vs. BetaShares Australia 200 | VanEck FTSE vs. Australian High Interest |
| VanEck Vectors vs. SPDR SP 500 | VanEck Vectors vs. Vanguard Total Market | VanEck Vectors vs. iShares Core SP | VanEck Vectors vs. iShares Core SP |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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