Correlation Between VanEck Vectors and Vanguard Index
Can any of the company-specific risk be diversified away by investing in both VanEck Vectors and Vanguard Index 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 Vectors and Vanguard Index into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VanEck Vectors ETF and Vanguard Index Funds, you can compare the effects of market volatilities on VanEck Vectors and Vanguard Index 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 Vectors with a short position of Vanguard Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Vectors and Vanguard Index.
Diversification Opportunities for VanEck Vectors and Vanguard Index
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between VanEck and Vanguard is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Vectors ETF and Vanguard Index Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Index Funds and VanEck Vectors 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 Vectors ETF are associated (or correlated) with Vanguard Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Index Funds has no effect on the direction of VanEck Vectors i.e., VanEck Vectors and Vanguard Index go up and down completely randomly.
Pair Corralation between VanEck Vectors and Vanguard Index
Assuming the 90 days trading horizon VanEck Vectors ETF is expected to under-perform the Vanguard Index. In addition to that, VanEck Vectors is 1.26 times more volatile than Vanguard Index Funds. It trades about -0.22 of its total potential returns per unit of risk. Vanguard Index Funds is currently generating about 0.24 per unit of volatility. If you would invest 567,027 in Vanguard Index Funds on September 3, 2024 and sell it today you would earn a total of 41,573 from holding Vanguard Index Funds or generate 7.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
VanEck Vectors ETF vs. Vanguard Index Funds
Performance |
| Timeline |
| VanEck Vectors ETF |
| Vanguard Index Funds |
VanEck Vectors and Vanguard Index Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VanEck Vectors and Vanguard Index
The main advantage of trading using opposite VanEck Vectors and Vanguard Index positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Vectors position performs unexpectedly, Vanguard Index 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 Vanguard Index will offset losses from the drop in Vanguard Index's long position.| VanEck Vectors vs. Vanguard Index Funds | VanEck Vectors vs. Vanguard Index Funds | VanEck Vectors vs. Vanguard STAR Funds | VanEck Vectors vs. SPDR SP 500 |
| Vanguard Index vs. Vanguard Funds Public | Vanguard Index vs. Vanguard Specialized Funds | Vanguard Index vs. Vanguard World | Vanguard Index vs. Vanguard Index 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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