Correlation Between Invesco DB and Vaneck ETF

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

By analyzing existing cross correlation between Invesco DB Commodity and Vaneck ETF Trust, you can compare the effects of market volatilities on Invesco DB 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 Invesco DB with a short position of Vaneck ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco DB and Vaneck ETF.

Diversification Opportunities for Invesco DB and Vaneck ETF

0.77

Correlation Coefficient

Invesco DB  Vaneck ETF

Poor diversification

The 3 months correlation between Invesco and Vaneck is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Invesco DB Commodity 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 Invesco DB 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 Invesco DB Commodity 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 Invesco DB i.e., Invesco DB and Vaneck ETF go up and down completely randomly.

Pair Corralation between Invesco DB and Vaneck ETF

Considering the 90-day investment horizon Invesco DB Commodity is expected to under-perform the Vaneck ETF. But the etf apears to be less risky and, when comparing its historical volatility, Invesco DB Commodity is 1.01 times less risky than Vaneck ETF. The etf trades about 0.0 of its potential returns per unit of risk. The Vaneck ETF Trust is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  4,829  in Vaneck ETF Trust on August 30, 2024 and sell it today you would earn a total of  1.00  from holding Vaneck ETF Trust or generate 0.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.65%
Values	Daily Returns

Invesco DB Commodity  vs.  Vaneck ETF Trust

Invesco DB Commodity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco DB Commodity has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Invesco DB is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Vaneck ETF Trust

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vaneck ETF Trust are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward indicators, Vaneck ETF is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Invesco DB and Vaneck ETF

The main advantage of trading using opposite Invesco DB and Vaneck ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco DB 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.

The idea behind Invesco DB Commodity and Vaneck ETF Trust 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.