Correlation Between VanEck Vectors and DOW

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

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

Diversification Opportunities for VanEck Vectors and DOW

0.63
  Correlation Coefficient
VanEck Vectors Gold
DOW

Poor diversification

The 3 months correlation between VanEck and DOW is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Vectors Gold Miners ETF and DOW in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on DOW and VanEck Vectors 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 Vectors Gold are associated (or correlated) with DOW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DOW has no effect on the direction of VanEck Vectors i.e. VanEck Vectors and DOW go up and down completely randomly.
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Pair Corralation between VanEck Vectors and DOW

Considering the 30-days investment horizon, VanEck Vectors Gold is expected to generate 1.57 times more return on investment than DOW. However, VanEck Vectors is 1.57 times more volatile than DOW. It trades about 0.19 of its potential returns per unit of risk. DOW is currently generating about 0.12 per unit of risk. If you would invest  2,634  in VanEck Vectors Gold on June 3, 2020 and sell it today you would earn a total of  983.00  from holding VanEck Vectors Gold or generate 37.32% return on investment over 30 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy98.41%
ValuesDaily Returns

VanEck Vectors Gold Miners ETF  vs.  DOW

 Performance (%) 
      Timeline 
 Predicted Return Density 
      Returns 
Check out your portfolio center. Please also try Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.


 
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