Correlation Between Vanguard Momentum and VanEck ETF
Can any of the company-specific risk be diversified away by investing in both Vanguard Momentum 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 Vanguard Momentum and VanEck ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Momentum Factor and VanEck ETF Trust, you can compare the effects of market volatilities on Vanguard Momentum 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 Vanguard Momentum with a short position of VanEck ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Momentum and VanEck ETF.
Diversification Opportunities for Vanguard Momentum and VanEck ETF
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and VanEck is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Momentum Factor 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 Vanguard Momentum 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 Momentum Factor 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 Vanguard Momentum i.e., Vanguard Momentum and VanEck ETF go up and down completely randomly.
Pair Corralation between Vanguard Momentum and VanEck ETF
Given the investment horizon of 90 days Vanguard Momentum Factor is expected to generate 1.47 times more return on investment than VanEck ETF. However, Vanguard Momentum is 1.47 times more volatile than VanEck ETF Trust. It trades about -0.19 of its potential returns per unit of risk. VanEck ETF Trust is currently generating about -0.29 per unit of risk. If you would invest 17,708 in Vanguard Momentum Factor on October 7, 2024 and sell it today you would lose (912.00) from holding Vanguard Momentum Factor or give up 5.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Momentum Factor vs. VanEck ETF Trust
Performance |
| Timeline |
| Vanguard Momentum Factor |
| VanEck ETF Trust |
Vanguard Momentum and VanEck ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Momentum and VanEck ETF
The main advantage of trading using opposite Vanguard Momentum and VanEck ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Momentum 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.| Vanguard Momentum vs. Vanguard Quality Factor | Vanguard Momentum vs. Vanguard Multifactor | Vanguard Momentum vs. Vanguard Value Factor | Vanguard Momentum vs. Vanguard Minimum Volatility |
| VanEck ETF vs. VanEck Morningstar International | VanEck ETF vs. VanEck Vectors ETF | VanEck ETF vs. VanEck Morningstar Wide | VanEck ETF vs. VanEck Inflation Allocation |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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