Correlation Between SWP Growth and VanEck China
Can any of the company-specific risk be diversified away by investing in both SWP Growth and VanEck China 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 SWP Growth and VanEck China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SWP Growth Income and VanEck China Bond, you can compare the effects of market volatilities on SWP Growth and VanEck China 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 SWP Growth with a short position of VanEck China. Check out your portfolio center. Please also check ongoing floating volatility patterns of SWP Growth and VanEck China.
Diversification Opportunities for SWP Growth and VanEck China
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SWP and VanEck is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding SWP Growth Income and VanEck China Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck China Bond and SWP Growth 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 SWP Growth Income are associated (or correlated) with VanEck China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck China Bond has no effect on the direction of SWP Growth i.e., SWP Growth and VanEck China go up and down completely randomly.
Pair Corralation between SWP Growth and VanEck China
Considering the 90-day investment horizon SWP Growth Income is expected to generate 2.71 times more return on investment than VanEck China. However, SWP Growth is 2.71 times more volatile than VanEck China Bond. It trades about 0.06 of its potential returns per unit of risk. VanEck China Bond is currently generating about 0.1 per unit of risk. If you would invest 2,598 in SWP Growth Income on September 13, 2024 and sell it today you would earn a total of 16.00 from holding SWP Growth Income or generate 0.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SWP Growth Income vs. VanEck China Bond
Performance |
| Timeline |
| SWP Growth Income |
| VanEck China Bond |
SWP Growth and VanEck China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SWP Growth and VanEck China
The main advantage of trading using opposite SWP Growth and VanEck China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SWP Growth position performs unexpectedly, VanEck China 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 China will offset losses from the drop in VanEck China's long position.| SWP Growth vs. Vanguard SP 500 | SWP Growth vs. Vanguard Real Estate | SWP Growth vs. Vanguard Total Bond | SWP Growth vs. Vanguard High Dividend |
| VanEck China vs. First Trust SSI | VanEck China vs. First Trust BuyWrite | VanEck China vs. First Trust Managed | VanEck China vs. First Trust Tactical |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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