Correlation Between Vanguard Index and VanEck Vectors
Can any of the company-specific risk be diversified away by investing in both Vanguard Index and VanEck Vectors 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 Index and VanEck Vectors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Index Funds and VanEck Vectors ETF, you can compare the effects of market volatilities on Vanguard Index and VanEck Vectors 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 Index with a short position of VanEck Vectors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Index and VanEck Vectors.
Diversification Opportunities for Vanguard Index and VanEck Vectors
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Vanguard and VanEck is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Index Funds and VanEck Vectors ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Vectors ETF and Vanguard Index 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 Index Funds are associated (or correlated) with VanEck Vectors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Vectors ETF has no effect on the direction of Vanguard Index i.e., Vanguard Index and VanEck Vectors go up and down completely randomly.
Pair Corralation between Vanguard Index and VanEck Vectors
Assuming the 90 days trading horizon Vanguard Index is expected to generate 1.4 times less return on investment than VanEck Vectors. But when comparing it to its historical volatility, Vanguard Index Funds is 1.94 times less risky than VanEck Vectors. It trades about 0.17 of its potential returns per unit of risk. VanEck Vectors ETF is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 62,327 in VanEck Vectors ETF on September 4, 2024 and sell it today you would earn a total of 31,673 from holding VanEck Vectors ETF or generate 50.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 69.92% |
| Values | Daily Returns |
Vanguard Index Funds vs. VanEck Vectors ETF
Performance |
| Timeline |
| Vanguard Index Funds |
| VanEck Vectors ETF |
Vanguard Index and VanEck Vectors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Index and VanEck Vectors
The main advantage of trading using opposite Vanguard Index and VanEck Vectors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Index position performs unexpectedly, VanEck Vectors 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 Vectors will offset losses from the drop in VanEck Vectors' long position.| Vanguard Index vs. Vanguard Funds Public | Vanguard Index vs. Vanguard Specialized Funds | Vanguard Index vs. Vanguard World | Vanguard Index vs. Vanguard Index Funds |
| VanEck Vectors vs. Vanguard Index Funds | VanEck Vectors vs. Vanguard Index Funds | VanEck Vectors vs. Vanguard STAR Funds | VanEck Vectors vs. SPDR SP 500 |
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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