Correlation Between VanEck Oil and Exchange Traded

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

By analyzing existing cross correlation between VanEck Oil Services and Exchange Traded Concepts, you can compare the effects of market volatilities on VanEck Oil and Exchange Traded 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 Oil with a short position of Exchange Traded. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Oil and Exchange Traded.

Diversification Opportunities for VanEck Oil and Exchange Traded

0.39

Correlation Coefficient

VanEck Oil  Exchange Traded

Weak diversification

The 3 months correlation between VanEck and Exchange is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Oil Services and Exchange Traded Concepts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exchange Traded Concepts and VanEck Oil 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 Oil Services are associated (or correlated) with Exchange Traded. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exchange Traded Concepts has no effect on the direction of VanEck Oil i.e., VanEck Oil and Exchange Traded go up and down completely randomly.

Pair Corralation between VanEck Oil and Exchange Traded

Considering the 90-day investment horizon VanEck Oil Services is expected to generate 1.1 times more return on investment than Exchange Traded. However, VanEck Oil is 1.1 times more volatile than Exchange Traded Concepts. It trades about 0.02 of its potential returns per unit of risk. Exchange Traded Concepts is currently generating about -0.08 per unit of risk. If you would invest  29,857  in VanEck Oil Services on August 30, 2024 and sell it today you would earn a total of  267.00  from holding VanEck Oil Services or generate 0.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

VanEck Oil Services  vs.  Exchange Traded Concepts

VanEck Oil Services

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Oil Services are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, VanEck Oil is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Exchange Traded Concepts

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exchange Traded Concepts has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Etf's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Pair Trading with VanEck Oil and Exchange Traded

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

The idea behind VanEck Oil Services and Exchange Traded Concepts 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.