Correlation Between VanEck Global and ETFS Battery

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

By analyzing existing cross correlation between VanEck Global Listed and ETFS Battery Tech, you can compare the effects of market volatilities on VanEck Global and ETFS Battery 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 Global with a short position of ETFS Battery. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Global and ETFS Battery.

Diversification Opportunities for VanEck Global and ETFS Battery

0.69

Correlation Coefficient

VanEck Global  ETFS Battery

Poor diversification

The 3 months correlation between VanEck and ETFS is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Global Listed and ETFS Battery Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETFS Battery Tech and VanEck Global 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 Global Listed are associated (or correlated) with ETFS Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETFS Battery Tech has no effect on the direction of VanEck Global i.e., VanEck Global and ETFS Battery go up and down completely randomly.

Pair Corralation between VanEck Global and ETFS Battery

Assuming the 90 days trading horizon VanEck Global Listed is expected to generate 0.77 times more return on investment than ETFS Battery. However, VanEck Global Listed is 1.3 times less risky than ETFS Battery. It trades about 0.29 of its potential returns per unit of risk. ETFS Battery Tech is currently generating about 0.12 per unit of risk. If you would invest  2,202  in VanEck Global Listed on September 16, 2024 and sell it today you would earn a total of  399.00  from holding VanEck Global Listed or generate 18.12% return on investment over 90 days.

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

VanEck Global Listed  vs.  ETFS Battery Tech

VanEck Global Listed

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Global Listed are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, VanEck Global unveiled solid returns over the last few months and may actually be approaching a breakup point.

ETFS Battery Tech

Risk-Adjusted Performance

9 of 100

OK

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

Pair Trading with VanEck Global and ETFS Battery

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

The idea behind VanEck Global Listed and ETFS Battery Tech 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.