Correlation Between VanEck ETF and SHP ETF
Can any of the company-specific risk be diversified away by investing in both VanEck ETF and SHP ETF 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 ETF and SHP ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VanEck ETF Trust and SHP ETF Trust, you can compare the effects of market volatilities on VanEck ETF and SHP ETF 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 ETF with a short position of SHP ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck ETF and SHP ETF.
Diversification Opportunities for VanEck ETF and SHP ETF
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between VanEck and SHP is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding VanEck ETF Trust and SHP ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHP ETF Trust and VanEck ETF 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 ETF Trust are associated (or correlated) with SHP ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHP ETF Trust has no effect on the direction of VanEck ETF i.e., VanEck ETF and SHP ETF go up and down completely randomly.
Pair Corralation between VanEck ETF and SHP ETF
Given the investment horizon of 90 days VanEck ETF Trust is expected to generate 1.19 times more return on investment than SHP ETF. However, VanEck ETF is 1.19 times more volatile than SHP ETF Trust. It trades about 0.38 of its potential returns per unit of risk. SHP ETF Trust is currently generating about 0.33 per unit of risk. If you would invest 5,018 in VanEck ETF Trust on September 1, 2024 and sell it today you would earn a total of 297.00 from holding VanEck ETF Trust or generate 5.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.47% |
| Values | Daily Returns |
VanEck ETF Trust vs. SHP ETF Trust
Performance |
| Timeline |
| VanEck ETF Trust |
| SHP ETF Trust |
VanEck ETF and SHP ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VanEck ETF and SHP ETF
The main advantage of trading using opposite VanEck ETF and SHP ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck ETF position performs unexpectedly, SHP ETF 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 SHP ETF will offset losses from the drop in SHP ETF's long position.| VanEck ETF vs. iShares Interest Rate | VanEck ETF vs. iShares Interest Rate | VanEck ETF vs. iShares Edge Investment | VanEck ETF vs. iShares Inflation Hedged |
| SHP ETF vs. iShares Interest Rate | SHP ETF vs. iShares Interest Rate | SHP ETF vs. iShares Edge Investment | SHP ETF vs. iShares Inflation Hedged |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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