Correlation Between United States and VanEck Junior

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

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

Diversification Opportunities for United States and VanEck Junior

0.08

Correlation Coefficient

United States  VanEck Junior

Significant diversification

The 3 months correlation between United and VanEck is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding United States Oil and VanEck Junior Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Junior Gold and United States 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 United States Oil are associated (or correlated) with VanEck Junior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Junior Gold has no effect on the direction of United States i.e., United States and VanEck Junior go up and down completely randomly.

Pair Corralation between United States and VanEck Junior

Considering the 90-day investment horizon United States Oil is expected to generate 0.67 times more return on investment than VanEck Junior. However, United States Oil is 1.49 times less risky than VanEck Junior. It trades about 0.12 of its potential returns per unit of risk. VanEck Junior Gold is currently generating about 0.08 per unit of risk. If you would invest  7,129  in United States Oil on September 15, 2024 and sell it today you would earn a total of  292.00  from holding United States Oil or generate 4.1% return on investment over 90 days.

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

United States Oil  vs.  VanEck Junior Gold

United States Oil

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in United States Oil are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, United States is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

VanEck Junior Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VanEck Junior Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady basic indicators, VanEck Junior is not utilizing all of its potentials. The new stock price chaos, may contribute to medium-term losses for the stakeholders.

Pair Trading with United States and VanEck Junior

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

The idea behind United States Oil and VanEck Junior Gold 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.