Correlation Between VanEck Oil and Westwood Salient
Can any of the company-specific risk be diversified away by investing in both VanEck Oil and Westwood Salient 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 Westwood Salient 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 Westwood Salient Enhanced, you can compare the effects of market volatilities on VanEck Oil and Westwood Salient 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 Westwood Salient. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Oil and Westwood Salient.
Diversification Opportunities for VanEck Oil and Westwood Salient
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between VanEck and Westwood is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Oil Services and Westwood Salient Enhanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westwood Salient Enhanced 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 Westwood Salient. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westwood Salient Enhanced has no effect on the direction of VanEck Oil i.e., VanEck Oil and Westwood Salient go up and down completely randomly.
Pair Corralation between VanEck Oil and Westwood Salient
Considering the 90-day investment horizon VanEck Oil is expected to generate 5.22 times less return on investment than Westwood Salient. In addition to that, VanEck Oil is 2.04 times more volatile than Westwood Salient Enhanced. It trades about 0.01 of its total potential returns per unit of risk. Westwood Salient Enhanced is currently generating about 0.06 per unit of volatility. If you would invest 2,234 in Westwood Salient Enhanced on September 1, 2024 and sell it today you would earn a total of 150.00 from holding Westwood Salient Enhanced or generate 6.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
VanEck Oil Services vs. Westwood Salient Enhanced
Performance |
| Timeline |
| VanEck Oil Services |
| Westwood Salient Enhanced |
VanEck Oil and Westwood Salient Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VanEck Oil and Westwood Salient
The main advantage of trading using opposite VanEck Oil and Westwood Salient positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Oil position performs unexpectedly, Westwood Salient 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 Westwood Salient will offset losses from the drop in Westwood Salient'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 |
| Westwood Salient vs. Invesco Dynamic Oil | Westwood Salient vs. SPDR SP Oil | Westwood Salient vs. SPDR SP Metals |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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