Correlation Between VanEck India and Invesco India

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

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

Diversification Opportunities for VanEck India and Invesco India

0.95

Correlation Coefficient

VanEck India  Invesco India

Almost no diversification

The 3 months correlation between VanEck and Invesco is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding VanEck India Growth and Invesco India ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco India ETF and VanEck India 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 India Growth are associated (or correlated) with Invesco India. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco India ETF has no effect on the direction of VanEck India i.e., VanEck India and Invesco India go up and down completely randomly.

Pair Corralation between VanEck India and Invesco India

Given the investment horizon of 90 days VanEck India Growth is expected to generate 1.15 times more return on investment than Invesco India. However, VanEck India is 1.15 times more volatile than Invesco India ETF. It trades about 0.21 of its potential returns per unit of risk. Invesco India ETF is currently generating about 0.19 per unit of risk. If you would invest  3,727  in VanEck India Growth on January 25, 2024 and sell it today you would earn a total of  995.00  from holding VanEck India Growth or generate 26.7% return on investment over 90 days.

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

VanEck India Growth  vs.  Invesco India ETF

VanEck India Growth

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck India Growth are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, VanEck India is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Invesco India ETF

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco India ETF are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Invesco India is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with VanEck India and Invesco India

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

The idea behind VanEck India Growth and Invesco India 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.