Correlation Between IShares Consumer and VanEck Oil
Can any of the company-specific risk be diversified away by investing in both IShares Consumer and VanEck Oil 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 IShares Consumer and VanEck Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Consumer Discretionary and VanEck Oil Services, you can compare the effects of market volatilities on IShares Consumer and VanEck Oil 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 IShares Consumer with a short position of VanEck Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Consumer and VanEck Oil.
Diversification Opportunities for IShares Consumer and VanEck Oil
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between IShares and VanEck is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding iShares Consumer Discretionary and VanEck Oil Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Oil Services and IShares Consumer 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 iShares Consumer Discretionary are associated (or correlated) with VanEck Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Oil Services has no effect on the direction of IShares Consumer i.e., IShares Consumer and VanEck Oil go up and down completely randomly.
Pair Corralation between IShares Consumer and VanEck Oil
Considering the 90-day investment horizon IShares Consumer is expected to generate 1.21 times less return on investment than VanEck Oil. But when comparing it to its historical volatility, iShares Consumer Discretionary is 2.47 times less risky than VanEck Oil. It trades about 0.42 of its potential returns per unit of risk. VanEck Oil Services is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 27,877 in VanEck Oil Services on August 26, 2024 and sell it today you would earn a total of 2,849 from holding VanEck Oil Services or generate 10.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Consumer Discretionary vs. VanEck Oil Services
Performance |
| Timeline |
| iShares Consumer Dis |
| VanEck Oil Services |
IShares Consumer and VanEck Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Consumer and VanEck Oil
The main advantage of trading using opposite IShares Consumer and VanEck Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Consumer position performs unexpectedly, VanEck Oil 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 Oil will offset losses from the drop in VanEck Oil's long position.| IShares Consumer vs. VanEck Pharmaceutical ETF | IShares Consumer vs. VanEck Biotech ETF | IShares Consumer vs. VanEck Oil Services | IShares Consumer vs. iShares Transportation Average |
| VanEck Oil vs. EA Series Trust | VanEck Oil vs. EA Series Trust | VanEck Oil vs. Rumble Inc | VanEck Oil vs. EA Series Trust |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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