Correlation Between Vanguard Materials and VanEck Video
Can any of the company-specific risk be diversified away by investing in both Vanguard Materials and VanEck Video 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 Vanguard Materials and VanEck Video into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Materials Index and VanEck Video Gaming, you can compare the effects of market volatilities on Vanguard Materials and VanEck Video 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 Vanguard Materials with a short position of VanEck Video. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Materials and VanEck Video.
Diversification Opportunities for Vanguard Materials and VanEck Video
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Vanguard and VanEck is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Materials Index and VanEck Video Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Video Gaming and Vanguard Materials 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 Vanguard Materials Index are associated (or correlated) with VanEck Video. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Video Gaming has no effect on the direction of Vanguard Materials i.e., Vanguard Materials and VanEck Video go up and down completely randomly.
Pair Corralation between Vanguard Materials and VanEck Video
Considering the 90-day investment horizon Vanguard Materials is expected to generate 7.83 times less return on investment than VanEck Video. But when comparing it to its historical volatility, Vanguard Materials Index is 1.86 times less risky than VanEck Video. It trades about 0.08 of its potential returns per unit of risk. VanEck Video Gaming is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 7,347 in VanEck Video Gaming on August 26, 2024 and sell it today you would earn a total of 940.00 from holding VanEck Video Gaming or generate 12.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Materials Index vs. VanEck Video Gaming
Performance |
| Timeline |
| Vanguard Materials Index |
| VanEck Video Gaming |
Vanguard Materials and VanEck Video Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Materials and VanEck Video
The main advantage of trading using opposite Vanguard Materials and VanEck Video positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Materials position performs unexpectedly, VanEck Video 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 Video will offset losses from the drop in VanEck Video's long position.| Vanguard Materials vs. Sprott Junior Copper | Vanguard Materials vs. Sprott Junior Uranium | Vanguard Materials vs. Sprott Nickel Miners |
| VanEck Video vs. Vanguard Industrials Index | VanEck Video vs. Vanguard Materials Index | VanEck Video vs. Vanguard Consumer Discretionary | VanEck Video vs. Vanguard Consumer Staples |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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