Correlation Between VanEck Gaming and Defense

Can any of the company-specific risk be diversified away by investing in both VanEck Gaming and Defense 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 Gaming and Defense into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between VanEck Gaming ETF and Defense And Aerospace, you can compare the effects of market volatilities on VanEck Gaming and Defense 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 Gaming with a short position of Defense. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Gaming and Defense.

Diversification Opportunities for VanEck Gaming and Defense

0.37

Correlation Coefficient

VanEck Gaming  Defense

Weak diversification

The 3 months correlation between VanEck and Defense is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Gaming ETF and Defense And Aerospace in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Defense And Aerospace and VanEck Gaming 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 Gaming ETF are associated (or correlated) with Defense. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Defense And Aerospace has no effect on the direction of VanEck Gaming i.e., VanEck Gaming and Defense go up and down completely randomly.

Pair Corralation between VanEck Gaming and Defense

Considering the 90-day investment horizon VanEck Gaming ETF is expected to under-perform the Defense. But the etf apears to be less risky and, when comparing its historical volatility, VanEck Gaming ETF is 1.35 times less risky than Defense. The etf trades about -0.01 of its potential returns per unit of risk. The Defense And Aerospace is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,948  in Defense And Aerospace on September 19, 2024 and sell it today you would earn a total of  22.00  from holding Defense And Aerospace or generate 1.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

VanEck Gaming ETF  vs.  Defense And Aerospace

VanEck Gaming ETF

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Gaming ETF are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking indicators, VanEck Gaming is not utilizing all of its potentials. The new stock price mess, may contribute to short-term losses for the institutional investors.

Defense And Aerospace

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Defense And Aerospace are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Defense is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with VanEck Gaming and Defense

The main advantage of trading using opposite VanEck Gaming and Defense positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Gaming position performs unexpectedly, Defense 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 Defense will offset losses from the drop in Defense's long position.

The idea behind VanEck Gaming ETF and Defense And Aerospace 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.

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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.