Correlation Between Vanguard Value and VanEck ETF
Can any of the company-specific risk be diversified away by investing in both Vanguard Value 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 Value 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 Value Factor and VanEck ETF Trust, you can compare the effects of market volatilities on Vanguard Value 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 Value with a short position of VanEck ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Value and VanEck ETF.
Diversification Opportunities for Vanguard Value and VanEck ETF
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and VanEck is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Value 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 Value 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 Value 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 Value i.e., Vanguard Value and VanEck ETF go up and down completely randomly.
Pair Corralation between Vanguard Value and VanEck ETF
Given the investment horizon of 90 days Vanguard Value Factor is expected to generate 0.98 times more return on investment than VanEck ETF. However, Vanguard Value Factor is 1.02 times less risky than VanEck ETF. It trades about -0.28 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 12,551 in Vanguard Value Factor on October 7, 2024 and sell it today you would lose (636.00) from holding Vanguard Value Factor or give up 5.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Value Factor vs. VanEck ETF Trust
Performance |
| Timeline |
| Vanguard Value Factor |
| VanEck ETF Trust |
Vanguard Value and VanEck ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Value and VanEck ETF
The main advantage of trading using opposite Vanguard Value and VanEck ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Value 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 Value vs. Vanguard Quality Factor | Vanguard Value vs. Vanguard Momentum Factor | Vanguard Value vs. Vanguard Multifactor | Vanguard Value 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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