Correlation Between VanEck International and Dow Jones
Can any of the company-specific risk be diversified away by investing in both VanEck International and Dow Jones 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 International and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VanEck International High and Dow Jones Industrial, you can compare the effects of market volatilities on VanEck International and Dow Jones 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 International with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck International and Dow Jones.
Diversification Opportunities for VanEck International and Dow Jones
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between VanEck and Dow is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding VanEck International High and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and VanEck International 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 International High are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of VanEck International i.e., VanEck International and Dow Jones go up and down completely randomly.
Pair Corralation between VanEck International and Dow Jones
Considering the 90-day investment horizon VanEck International High is expected to under-perform the Dow Jones. But the etf apears to be less risky and, when comparing its historical volatility, VanEck International High is 2.83 times less risky than Dow Jones. The etf trades about -0.05 of its potential returns per unit of risk. The Dow Jones Industrial is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 4,109,142 in Dow Jones Industrial on August 28, 2024 and sell it today you would earn a total of 364,515 from holding Dow Jones Industrial or generate 8.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
VanEck International High vs. Dow Jones Industrial
Performance |
| Timeline |
VanEck International and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
VanEck International High
Pair trading matchups for VanEck International
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with VanEck International and Dow Jones
The main advantage of trading using opposite VanEck International and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck International position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| VanEck International vs. First Trust Senior | VanEck International vs. First Trust Low | VanEck International vs. First Trust Enhanced | VanEck International vs. First Trust TCW |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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