Correlation Between IShares Energy and VanEck Oil
Can any of the company-specific risk be diversified away by investing in both IShares Energy 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 Energy 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 Energy ETF and VanEck Oil Refiners, you can compare the effects of market volatilities on IShares Energy 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 Energy with a short position of VanEck Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Energy and VanEck Oil.
Diversification Opportunities for IShares Energy and VanEck Oil
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and VanEck is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding iShares Energy ETF and VanEck Oil Refiners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Oil Refiners and IShares Energy 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 Energy ETF 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 Refiners has no effect on the direction of IShares Energy i.e., IShares Energy and VanEck Oil go up and down completely randomly.
Pair Corralation between IShares Energy and VanEck Oil
Considering the 90-day investment horizon iShares Energy ETF is expected to generate 1.12 times more return on investment than VanEck Oil. However, IShares Energy is 1.12 times more volatile than VanEck Oil Refiners. It trades about 0.08 of its potential returns per unit of risk. VanEck Oil Refiners is currently generating about -0.01 per unit of risk. If you would invest 4,150 in iShares Energy ETF on September 2, 2024 and sell it today you would earn a total of 896.00 from holding iShares Energy ETF or generate 21.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Energy ETF vs. VanEck Oil Refiners
Performance |
| Timeline |
| iShares Energy ETF |
| VanEck Oil Refiners |
IShares Energy and VanEck Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Energy and VanEck Oil
The main advantage of trading using opposite IShares Energy and VanEck Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Energy 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 Energy vs. iShares Basic Materials | IShares Energy vs. iShares Utilities ETF | IShares Energy vs. iShares Financials ETF | IShares Energy vs. iShares Healthcare ETF |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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