Correlation Between VanEck Oil and IShares Oil
Can any of the company-specific risk be diversified away by investing in both VanEck Oil and IShares 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 VanEck Oil and IShares Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VanEck Oil Services and iShares Oil Gas, you can compare the effects of market volatilities on VanEck Oil and IShares 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 VanEck Oil with a short position of IShares Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Oil and IShares Oil.
Diversification Opportunities for VanEck Oil and IShares Oil
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between VanEck and IShares is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Oil Services and iShares Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Oil Gas and VanEck Oil 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 VanEck Oil Services are associated (or correlated) with IShares Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Oil Gas has no effect on the direction of VanEck Oil i.e., VanEck Oil and IShares Oil go up and down completely randomly.
Pair Corralation between VanEck Oil and IShares Oil
Considering the 90-day investment horizon VanEck Oil Services is expected to generate 1.65 times more return on investment than IShares Oil. However, VanEck Oil is 1.65 times more volatile than iShares Oil Gas. It trades about 0.24 of its potential returns per unit of risk. iShares Oil Gas is currently generating about 0.39 per unit of risk. If you would invest 27,592 in VanEck Oil Services on August 27, 2024 and sell it today you would earn a total of 3,134 from holding VanEck Oil Services or generate 11.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
VanEck Oil Services vs. iShares Oil Gas
Performance |
| Timeline |
| VanEck Oil Services |
| iShares Oil Gas |
VanEck Oil and IShares Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VanEck Oil and IShares Oil
The main advantage of trading using opposite VanEck Oil and IShares Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Oil position performs unexpectedly, IShares 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 IShares Oil will offset losses from the drop in IShares Oil's long position.| VanEck Oil vs. SPDR SP Oil | VanEck Oil vs. Energy Select Sector | VanEck Oil vs. VanEck Semiconductor ETF | VanEck Oil vs. Materials Select Sector |
| IShares Oil vs. EA Series Trust | IShares Oil vs. EA Series Trust | IShares Oil vs. Rumble Inc | IShares 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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