Correlation Between NYSE Composite and VanEck Vectors
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and VanEck Vectors 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 NYSE Composite and VanEck Vectors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and VanEck Vectors ETF, you can compare the effects of market volatilities on NYSE Composite and VanEck Vectors 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 NYSE Composite with a short position of VanEck Vectors. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and VanEck Vectors.
Diversification Opportunities for NYSE Composite and VanEck Vectors
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NYSE and VanEck is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and VanEck Vectors ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Vectors ETF and NYSE Composite 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 NYSE Composite are associated (or correlated) with VanEck Vectors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Vectors ETF has no effect on the direction of NYSE Composite i.e., NYSE Composite and VanEck Vectors go up and down completely randomly.
Pair Corralation between NYSE Composite and VanEck Vectors
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.37 times more return on investment than VanEck Vectors. However, NYSE Composite is 2.71 times less risky than VanEck Vectors. It trades about 0.09 of its potential returns per unit of risk. VanEck Vectors ETF is currently generating about -0.05 per unit of risk. If you would invest 1,799,427 in NYSE Composite on November 3, 2024 and sell it today you would earn a total of 200,455 from holding NYSE Composite or generate 11.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.46% |
| Values | Daily Returns |
NYSE Composite vs. VanEck Vectors ETF
Performance |
| Timeline |
NYSE Composite and VanEck Vectors Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
VanEck Vectors ETF
Pair trading matchups for VanEck Vectors
Pair Trading with NYSE Composite and VanEck Vectors
The main advantage of trading using opposite NYSE Composite and VanEck Vectors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, VanEck Vectors 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 Vectors will offset losses from the drop in VanEck Vectors' long position.| NYSE Composite vs. Palomar Holdings | NYSE Composite vs. The Peoples Insurance | NYSE Composite vs. Radian Group | NYSE Composite vs. Nascent Wine |
| VanEck Vectors vs. Gogoro Inc | VanEck Vectors vs. Global X Disruptive | VanEck Vectors vs. Gulf Island Fabrication | VanEck Vectors vs. VanEck Green Bond |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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