Correlation Between Van Eck and ProShares Pet

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

By analyzing existing cross correlation between Van Eck and ProShares Pet Care, you can compare the effects of market volatilities on Van Eck and ProShares Pet 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 Van Eck with a short position of ProShares Pet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Van Eck and ProShares Pet.

Diversification Opportunities for Van Eck and ProShares Pet

-0.72

Correlation Coefficient

Van Eck  ProShares Pet

Pay attention - limited upside

The 3 months correlation between Van and ProShares is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Van Eck and ProShares Pet Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Pet Care and Van Eck 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 Van Eck are associated (or correlated) with ProShares Pet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Pet Care has no effect on the direction of Van Eck i.e., Van Eck and ProShares Pet go up and down completely randomly.

Pair Corralation between Van Eck and ProShares Pet

Considering the 90-day investment horizon Van Eck is expected to generate 0.28 times more return on investment than ProShares Pet. However, Van Eck is 3.61 times less risky than ProShares Pet. It trades about 0.27 of its potential returns per unit of risk. ProShares Pet Care is currently generating about -0.01 per unit of risk. If you would invest  2,720  in Van Eck on September 2, 2024 and sell it today you would earn a total of  47.00  from holding Van Eck or generate 1.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	46.88%
Values	Daily Returns

Van Eck  vs.  ProShares Pet Care

Van Eck

Risk-Adjusted Performance

0 of 100

Solid

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

ProShares Pet Care

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Van Eck and ProShares Pet

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

The idea behind Van Eck and ProShares Pet Care 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.

Check out your portfolio center.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.