Correlation Between Global X and VanEck Energy
Can any of the company-specific risk be diversified away by investing in both Global X and VanEck Energy 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 Global X and VanEck Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X MLP and VanEck Energy Income, you can compare the effects of market volatilities on Global X and VanEck Energy 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 Global X with a short position of VanEck Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and VanEck Energy.
Diversification Opportunities for Global X and VanEck Energy
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Global and VanEck is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Global X MLP and VanEck Energy Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Energy Income and Global X 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 Global X MLP are associated (or correlated) with VanEck Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Energy Income has no effect on the direction of Global X i.e., Global X and VanEck Energy go up and down completely randomly.
Pair Corralation between Global X and VanEck Energy
Given the investment horizon of 90 days Global X is expected to generate 1.91 times less return on investment than VanEck Energy. But when comparing it to its historical volatility, Global X MLP is 1.32 times less risky than VanEck Energy. It trades about 0.39 of its potential returns per unit of risk. VanEck Energy Income is currently generating about 0.56 of returns per unit of risk over similar time horizon. If you would invest 8,775 in VanEck Energy Income on August 24, 2024 and sell it today you would earn a total of 1,247 from holding VanEck Energy Income or generate 14.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X MLP vs. VanEck Energy Income
Performance |
| Timeline |
| Global X MLP |
| VanEck Energy Income |
Global X and VanEck Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and VanEck Energy
The main advantage of trading using opposite Global X and VanEck Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, VanEck Energy 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 Energy will offset losses from the drop in VanEck Energy's long position.| Global X vs. Global X MLP | Global X vs. InfraCap MLP ETF | Global X vs. Alerian MLP ETF | Global X vs. First Trust North |
| VanEck Energy vs. Alerian Energy Infrastructure | VanEck Energy vs. Tortoise North American | VanEck Energy vs. VanEck Oil Refiners | VanEck Energy vs. Global X MLP |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities |