Correlation Between Microsoft and VanEck ETF
Can any of the company-specific risk be diversified away by investing in both Microsoft and VanEck ETF 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 Microsoft and VanEck ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and VanEck ETF Trust, you can compare the effects of market volatilities on Microsoft and VanEck ETF 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 Microsoft with a short position of VanEck ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and VanEck ETF.
Diversification Opportunities for Microsoft and VanEck ETF
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Microsoft and VanEck is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and VanEck ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck ETF Trust and Microsoft 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 Microsoft are associated (or correlated) with VanEck ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck ETF Trust has no effect on the direction of Microsoft i.e., Microsoft and VanEck ETF go up and down completely randomly.
Pair Corralation between Microsoft and VanEck ETF
Given the investment horizon of 90 days Microsoft is expected to generate 1.3 times less return on investment than VanEck ETF. In addition to that, Microsoft is 1.56 times more volatile than VanEck ETF Trust. It trades about 0.15 of its total potential returns per unit of risk. VanEck ETF Trust is currently generating about 0.3 per unit of volatility. If you would invest 2,857 in VanEck ETF Trust on September 2, 2024 and sell it today you would earn a total of 130.00 from holding VanEck ETF Trust or generate 4.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. VanEck ETF Trust
Performance |
| Timeline |
| Microsoft |
| VanEck ETF Trust |
Microsoft and VanEck ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and VanEck ETF
The main advantage of trading using opposite Microsoft and VanEck ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, VanEck ETF 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 ETF will offset losses from the drop in VanEck ETF's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| VanEck ETF vs. VanEck Morningstar International | VanEck ETF vs. VanEck Vectors ETF | VanEck ETF vs. BlackRock Carbon Transition | VanEck ETF vs. VanEck Morningstar Wide |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
Other Complementary Tools
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |