Correlation Between VanEck Gaming and Vanguard Consumer
Can any of the company-specific risk be diversified away by investing in both VanEck Gaming and Vanguard Consumer 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 Gaming and Vanguard Consumer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VanEck Gaming ETF and Vanguard Consumer Discretionary, you can compare the effects of market volatilities on VanEck Gaming and Vanguard Consumer 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 Gaming with a short position of Vanguard Consumer. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Gaming and Vanguard Consumer.
Diversification Opportunities for VanEck Gaming and Vanguard Consumer
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between VanEck and Vanguard is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Gaming ETF and Vanguard Consumer Discretionar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Consumer and VanEck Gaming 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 Gaming ETF are associated (or correlated) with Vanguard Consumer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Consumer has no effect on the direction of VanEck Gaming i.e., VanEck Gaming and Vanguard Consumer go up and down completely randomly.
Pair Corralation between VanEck Gaming and Vanguard Consumer
Considering the 90-day investment horizon VanEck Gaming ETF is expected to under-perform the Vanguard Consumer. In addition to that, VanEck Gaming is 1.38 times more volatile than Vanguard Consumer Discretionary. It trades about -0.25 of its total potential returns per unit of risk. Vanguard Consumer Discretionary is currently generating about -0.23 per unit of volatility. If you would invest 31,419 in Vanguard Consumer Discretionary on January 26, 2024 and sell it today you would lose (1,479) from holding Vanguard Consumer Discretionary or give up 4.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
VanEck Gaming ETF vs. Vanguard Consumer Discretionar
Performance |
| Timeline |
| VanEck Gaming ETF |
| Vanguard Consumer |
VanEck Gaming and Vanguard Consumer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VanEck Gaming and Vanguard Consumer
The main advantage of trading using opposite VanEck Gaming and Vanguard Consumer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Gaming position performs unexpectedly, Vanguard Consumer 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 Vanguard Consumer will offset losses from the drop in Vanguard Consumer's long position.| VanEck Gaming vs. Fidelity MSCI Consumer | VanEck Gaming vs. Fidelity MSCI Industrials | VanEck Gaming vs. Fidelity MSCI Financials | VanEck Gaming vs. Fidelity MSCI Communication |
| Vanguard Consumer vs. Fidelity MSCI Consumer | Vanguard Consumer vs. Fidelity MSCI Industrials | Vanguard Consumer vs. Fidelity MSCI Financials | Vanguard Consumer vs. Fidelity MSCI Communication |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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