Correlation Between VanEck China and VanEck Merk
Can any of the company-specific risk be diversified away by investing in both VanEck China and VanEck Merk 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 China and VanEck Merk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VanEck China Bond and VanEck Merk Gold, you can compare the effects of market volatilities on VanEck China and VanEck Merk 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 China with a short position of VanEck Merk. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck China and VanEck Merk.
Diversification Opportunities for VanEck China and VanEck Merk
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between VanEck and VanEck is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding VanEck China Bond and VanEck Merk Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Merk Gold and VanEck China 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 China Bond are associated (or correlated) with VanEck Merk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Merk Gold has no effect on the direction of VanEck China i.e., VanEck China and VanEck Merk go up and down completely randomly.
Pair Corralation between VanEck China and VanEck Merk
Given the investment horizon of 90 days VanEck China is expected to generate 18.87 times less return on investment than VanEck Merk. But when comparing it to its historical volatility, VanEck China Bond is 4.82 times less risky than VanEck Merk. It trades about 0.07 of its potential returns per unit of risk. VanEck Merk Gold is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 2,105 in VanEck Merk Gold on January 26, 2024 and sell it today you would earn a total of 137.00 from holding VanEck Merk Gold or generate 6.51% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 95.45% |
Values | Daily Returns |
VanEck China Bond vs. VanEck Merk Gold
Performance |
Timeline |
VanEck China Bond |
VanEck Merk Gold |
VanEck China and VanEck Merk Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with VanEck China and VanEck Merk
The main advantage of trading using opposite VanEck China and VanEck Merk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck China position performs unexpectedly, VanEck Merk 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 Merk will offset losses from the drop in VanEck Merk's long position.VanEck China vs. First Trust SSI | VanEck China vs. First Trust BuyWrite | VanEck China vs. First Trust Managed | VanEck China vs. First Trust Tactical |
VanEck Merk vs. HUMANA INC | VanEck Merk vs. Aquagold International | VanEck Merk vs. Barloworld Ltd ADR | VanEck Merk vs. Morningstar Unconstrained Allocation |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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