Correlation Between Global X and VanEck ETF
Can any of the company-specific risk be diversified away by investing in both Global X 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 Global X and VanEck ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Funds and VanEck ETF Trust, you can compare the effects of market volatilities on Global X 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 Global X with a short position of VanEck ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and VanEck ETF.
Diversification Opportunities for Global X and VanEck ETF
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Global and VanEck is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Global X Funds 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 Global X 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 Global X Funds 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 Global X i.e., Global X and VanEck ETF go up and down completely randomly.
Pair Corralation between Global X and VanEck ETF
Given the investment horizon of 90 days Global X is expected to generate 1.26 times less return on investment than VanEck ETF. In addition to that, Global X is 1.46 times more volatile than VanEck ETF Trust. It trades about 0.07 of its total potential returns per unit of risk. VanEck ETF Trust is currently generating about 0.13 per unit of volatility. If you would invest 4,378 in VanEck ETF Trust on August 30, 2024 and sell it today you would earn a total of 135.00 from holding VanEck ETF Trust or generate 3.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X Funds vs. VanEck ETF Trust
Performance |
| Timeline |
| Global X Funds |
| VanEck ETF Trust |
Global X and VanEck ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and VanEck ETF
The main advantage of trading using opposite Global X and VanEck ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X 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.| Global X vs. First Trust Exchange Traded | Global X vs. Ultimus Managers Trust | Global X vs. Horizon Kinetics Medical | Global X vs. Harbor Health Care |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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