Correlation Between VanEck Semiconductor and Lagercrantz Group

Can any of the company-specific risk be diversified away by investing in both VanEck Semiconductor and Lagercrantz Group 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 Lagercrantz Group 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 Lagercrantz Group AB, you can compare the effects of market volatilities on VanEck Semiconductor and Lagercrantz Group 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 Lagercrantz Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Semiconductor and Lagercrantz Group.

Diversification Opportunities for VanEck Semiconductor and Lagercrantz Group

0.41

Correlation Coefficient

VanEck Semiconductor  Lagercrantz Group

Very weak diversification

The 3 months correlation between VanEck and Lagercrantz is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Semiconductor ETF and Lagercrantz Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lagercrantz Group 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 Lagercrantz Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lagercrantz Group has no effect on the direction of VanEck Semiconductor i.e., VanEck Semiconductor and Lagercrantz Group go up and down completely randomly.

Pair Corralation between VanEck Semiconductor and Lagercrantz Group

Considering the 90-day investment horizon VanEck Semiconductor is expected to generate 1.68 times less return on investment than Lagercrantz Group. But when comparing it to its historical volatility, VanEck Semiconductor ETF is 1.09 times less risky than Lagercrantz Group. It trades about 0.09 of its potential returns per unit of risk. Lagercrantz Group AB is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  16,190  in Lagercrantz Group AB on February 23, 2024 and sell it today you would earn a total of  1,850  from holding Lagercrantz Group AB or generate 11.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.02%
Values	Daily Returns

VanEck Semiconductor ETF  vs.  Lagercrantz Group AB

VanEck Semiconductor ETF

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Semiconductor ETF are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak primary indicators, VanEck Semiconductor demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Lagercrantz Group

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lagercrantz Group AB are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Lagercrantz Group sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VanEck Semiconductor and Lagercrantz Group

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

The idea behind VanEck Semiconductor ETF and Lagercrantz Group AB 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.