Correlation Between VanEck Oil and IShares Thematic
Can any of the company-specific risk be diversified away by investing in both VanEck Oil and IShares Thematic 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 Thematic 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 Thematic Rotation, you can compare the effects of market volatilities on VanEck Oil and IShares Thematic 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 Thematic. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Oil and IShares Thematic.
Diversification Opportunities for VanEck Oil and IShares Thematic
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between VanEck and IShares is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Oil Services and iShares Thematic Rotation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Thematic Rotation 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 Thematic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Thematic Rotation has no effect on the direction of VanEck Oil i.e., VanEck Oil and IShares Thematic go up and down completely randomly.
Pair Corralation between VanEck Oil and IShares Thematic
Considering the 90-day investment horizon VanEck Oil is expected to generate 1.24 times less return on investment than IShares Thematic. In addition to that, VanEck Oil is 2.54 times more volatile than iShares Thematic Rotation. It trades about 0.07 of its total potential returns per unit of risk. iShares Thematic Rotation is currently generating about 0.22 per unit of volatility. If you would invest 3,158 in iShares Thematic Rotation on September 12, 2024 and sell it today you would earn a total of 350.01 from holding iShares Thematic Rotation or generate 11.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
VanEck Oil Services vs. iShares Thematic Rotation
Performance |
| Timeline |
| VanEck Oil Services |
| iShares Thematic Rotation |
VanEck Oil and IShares Thematic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VanEck Oil and IShares Thematic
The main advantage of trading using opposite VanEck Oil and IShares Thematic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Oil position performs unexpectedly, IShares Thematic 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 Thematic will offset losses from the drop in IShares Thematic'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 |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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