Correlation Between VanEck Gold and Fidelity MSCI

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

By analyzing existing cross correlation between VanEck Gold Miners and Fidelity MSCI Materials, you can compare the effects of market volatilities on VanEck Gold and Fidelity MSCI 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 Gold with a short position of Fidelity MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Gold and Fidelity MSCI.

Diversification Opportunities for VanEck Gold and Fidelity MSCI

0.38

Correlation Coefficient

VanEck Gold  Fidelity MSCI

Weak diversification

The 3 months correlation between VanEck and Fidelity is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Gold Miners and Fidelity MSCI Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity MSCI Materials and VanEck Gold 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 Gold Miners are associated (or correlated) with Fidelity MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity MSCI Materials has no effect on the direction of VanEck Gold i.e., VanEck Gold and Fidelity MSCI go up and down completely randomly.

Pair Corralation between VanEck Gold and Fidelity MSCI

Considering the 90-day investment horizon VanEck Gold Miners is expected to generate 2.12 times more return on investment than Fidelity MSCI. However, VanEck Gold is 2.12 times more volatile than Fidelity MSCI Materials. It trades about 0.04 of its potential returns per unit of risk. Fidelity MSCI Materials is currently generating about 0.04 per unit of risk. If you would invest  3,088  in VanEck Gold Miners on September 12, 2024 and sell it today you would earn a total of  710.00  from holding VanEck Gold Miners or generate 22.99% return on investment over 90 days.

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

VanEck Gold Miners  vs.  Fidelity MSCI Materials

VanEck Gold Miners

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days VanEck Gold Miners has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, VanEck Gold is not utilizing all of its potentials. The new stock price disturbance, may contribute to short-term losses for the investors.

Fidelity MSCI Materials

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity MSCI Materials are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Fidelity MSCI is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with VanEck Gold and Fidelity MSCI

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

The idea behind VanEck Gold Miners and Fidelity MSCI Materials 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 CEOs Directory module to screen CEOs from public companies around the world.