Correlation Between VanEck AEX and Amundi Index
Can any of the company-specific risk be diversified away by investing in both VanEck AEX and Amundi Index 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 AEX and Amundi Index into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VanEck AEX UCITS and Amundi Index Solutions, you can compare the effects of market volatilities on VanEck AEX and Amundi Index 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 AEX with a short position of Amundi Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck AEX and Amundi Index.
Diversification Opportunities for VanEck AEX and Amundi Index
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between VanEck and Amundi is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding VanEck AEX UCITS and Amundi Index Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amundi Index Solutions and VanEck AEX 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 AEX UCITS are associated (or correlated) with Amundi Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amundi Index Solutions has no effect on the direction of VanEck AEX i.e., VanEck AEX and Amundi Index go up and down completely randomly.
Pair Corralation between VanEck AEX and Amundi Index
Assuming the 90 days trading horizon VanEck AEX UCITS is expected to generate 0.91 times more return on investment than Amundi Index. However, VanEck AEX UCITS is 1.1 times less risky than Amundi Index. It trades about -0.02 of its potential returns per unit of risk. Amundi Index Solutions is currently generating about -0.07 per unit of risk. If you would invest 9,028 in VanEck AEX UCITS on August 30, 2024 and sell it today you would lose (225.00) from holding VanEck AEX UCITS or give up 2.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
VanEck AEX UCITS vs. Amundi Index Solutions
Performance |
| Timeline |
| VanEck AEX UCITS |
| Amundi Index Solutions |
VanEck AEX and Amundi Index Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VanEck AEX and Amundi Index
The main advantage of trading using opposite VanEck AEX and Amundi Index positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck AEX position performs unexpectedly, Amundi Index 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 Amundi Index will offset losses from the drop in Amundi Index's long position.The idea behind VanEck AEX UCITS and Amundi Index Solutions pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Amundi Index vs. Manitou BF SA | Amundi Index vs. Ossiam Minimum Variance | Amundi Index vs. Ekinops SA | Amundi Index vs. Orapi SA |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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