Correlation Between VanEck Steel and VanEck Agribusiness
Can any of the company-specific risk be diversified away by investing in both VanEck Steel and VanEck Agribusiness 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 Steel and VanEck Agribusiness into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VanEck Steel ETF and VanEck Agribusiness ETF, you can compare the effects of market volatilities on VanEck Steel and VanEck Agribusiness 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 Steel with a short position of VanEck Agribusiness. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Steel and VanEck Agribusiness.
Diversification Opportunities for VanEck Steel and VanEck Agribusiness
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between VanEck and VanEck is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Steel ETF and VanEck Agribusiness ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Agribusiness ETF and VanEck Steel 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 Steel ETF are associated (or correlated) with VanEck Agribusiness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Agribusiness ETF has no effect on the direction of VanEck Steel i.e., VanEck Steel and VanEck Agribusiness go up and down completely randomly.
Pair Corralation between VanEck Steel and VanEck Agribusiness
Considering the 90-day investment horizon VanEck Steel ETF is expected to generate 2.47 times more return on investment than VanEck Agribusiness. However, VanEck Steel is 2.47 times more volatile than VanEck Agribusiness ETF. It trades about 0.13 of its potential returns per unit of risk. VanEck Agribusiness ETF is currently generating about -0.04 per unit of risk. If you would invest 6,719 in VanEck Steel ETF on August 26, 2024 and sell it today you would earn a total of 370.00 from holding VanEck Steel ETF or generate 5.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
VanEck Steel ETF vs. VanEck Agribusiness ETF
Performance |
| Timeline |
| VanEck Steel ETF |
| VanEck Agribusiness ETF |
VanEck Steel and VanEck Agribusiness Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VanEck Steel and VanEck Agribusiness
The main advantage of trading using opposite VanEck Steel and VanEck Agribusiness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Steel position performs unexpectedly, VanEck Agribusiness 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 Agribusiness will offset losses from the drop in VanEck Agribusiness' long position.| VanEck Steel vs. SPDR SP Metals | VanEck Steel vs. VanEck Agribusiness ETF | VanEck Steel vs. Invesco DB Base | VanEck Steel vs. Invesco DB Agriculture |
| VanEck Agribusiness vs. Invesco DB Agriculture | VanEck Agribusiness vs. Invesco DB Commodity | VanEck Agribusiness vs. VanEck Steel ETF | VanEck Agribusiness 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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