Correlation Between BetaShares Geared and VanEck Vectors

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

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

Diversification Opportunities for BetaShares Geared and VanEck Vectors

0.44

Correlation Coefficient

BetaShares Geared  VanEck Vectors

Very weak diversification

The 3 months correlation between BetaShares and VanEck is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding BetaShares Geared Australian and VanEck Vectors MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Vectors MSCI and BetaShares Geared 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 BetaShares Geared Australian 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 MSCI has no effect on the direction of BetaShares Geared i.e., BetaShares Geared and VanEck Vectors go up and down completely randomly.

Pair Corralation between BetaShares Geared and VanEck Vectors

Assuming the 90 days trading horizon BetaShares Geared is expected to generate 91.0 times less return on investment than VanEck Vectors. In addition to that, BetaShares Geared is 1.47 times more volatile than VanEck Vectors MSCI. It trades about 0.0 of its total potential returns per unit of risk. VanEck Vectors MSCI is currently generating about 0.12 per unit of volatility. If you would invest  5,458  in VanEck Vectors MSCI on September 26, 2024 and sell it today you would earn a total of  417.00  from holding VanEck Vectors MSCI or generate 7.64% return on investment over 90 days.

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

BetaShares Geared Australian  vs.  VanEck Vectors MSCI

BetaShares Geared

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BetaShares Geared Australian has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, BetaShares Geared is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

VanEck Vectors MSCI

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Vectors MSCI are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, VanEck Vectors may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with BetaShares Geared and VanEck Vectors

The main advantage of trading using opposite BetaShares Geared and VanEck Vectors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaShares Geared 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.

The idea behind BetaShares Geared Australian and VanEck Vectors MSCI 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.