Correlation Between VanEck Semiconductor and VanEck Long

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

By analyzing existing cross correlation between VanEck Semiconductor ETF and VanEck Long Muni, you can compare the effects of market volatilities on VanEck Semiconductor and VanEck Long 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 Semiconductor with a short position of VanEck Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Semiconductor and VanEck Long.

Diversification Opportunities for VanEck Semiconductor and VanEck Long

-0.38

Correlation Coefficient

VanEck Semiconductor  VanEck Long

Very good diversification

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

Pair Corralation between VanEck Semiconductor and VanEck Long

Considering the 90-day investment horizon VanEck Semiconductor ETF is expected to generate 4.29 times more return on investment than VanEck Long. However, VanEck Semiconductor is 4.29 times more volatile than VanEck Long Muni. It trades about 0.07 of its potential returns per unit of risk. VanEck Long Muni is currently generating about 0.06 per unit of risk. If you would invest  22,519  in VanEck Semiconductor ETF on September 2, 2024 and sell it today you would earn a total of  1,694  from holding VanEck Semiconductor ETF or generate 7.52% return on investment over 90 days.

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

VanEck Semiconductor ETF  vs.  VanEck Long Muni

VanEck Semiconductor ETF

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Semiconductor ETF are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak primary indicators, VanEck Semiconductor may actually be approaching a critical reversion point that can send shares even higher in January 2025.

VanEck Long Muni

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Long Muni are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy essential indicators, VanEck Long is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with VanEck Semiconductor and VanEck Long

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

The idea behind VanEck Semiconductor ETF and VanEck Long Muni 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.