Correlation Between Xtrackers Harvest and VanEck ChiNext

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

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

Diversification Opportunities for Xtrackers Harvest and VanEck ChiNext

0.88

Correlation Coefficient

Xtrackers Harvest  VanEck ChiNext

Very poor diversification

The 3 months correlation between Xtrackers and VanEck is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers Harvest CSI and VanEck ChiNext ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck ChiNext ETF and Xtrackers Harvest 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 Xtrackers Harvest CSI are associated (or correlated) with VanEck ChiNext. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck ChiNext ETF has no effect on the direction of Xtrackers Harvest i.e., Xtrackers Harvest and VanEck ChiNext go up and down completely randomly.

Pair Corralation between Xtrackers Harvest and VanEck ChiNext

Given the investment horizon of 90 days Xtrackers Harvest is expected to generate 1.05 times less return on investment than VanEck ChiNext. But when comparing it to its historical volatility, Xtrackers Harvest CSI is 1.78 times less risky than VanEck ChiNext. It trades about 0.13 of its potential returns per unit of risk. VanEck ChiNext ETF is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,232  in VanEck ChiNext ETF on February 19, 2024 and sell it today you would earn a total of  186.00  from holding VanEck ChiNext ETF or generate 8.33% return on investment over 90 days.

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

Xtrackers Harvest CSI  vs.  VanEck ChiNext ETF

Xtrackers Harvest CSI

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers Harvest CSI are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent technical indicators, Xtrackers Harvest may actually be approaching a critical reversion point that can send shares even higher in June 2024.

VanEck ChiNext ETF

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck ChiNext ETF are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, VanEck ChiNext may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Xtrackers Harvest and VanEck ChiNext

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

The idea behind Xtrackers Harvest CSI and VanEck ChiNext ETF 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.