Correlation Between VanEck Inflation and ETF Series

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

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

Diversification Opportunities for VanEck Inflation and ETF Series

0.38

Correlation Coefficient

VanEck Inflation  ETF Series

Weak diversification

The 3 months correlation between VanEck and ETF is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Inflation Allocation and ETF Series Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETF Series Solutions and VanEck Inflation 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 Inflation Allocation are associated (or correlated) with ETF Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETF Series Solutions has no effect on the direction of VanEck Inflation i.e., VanEck Inflation and ETF Series go up and down completely randomly.

Pair Corralation between VanEck Inflation and ETF Series

Given the investment horizon of 90 days VanEck Inflation Allocation is expected to generate 1.07 times more return on investment than ETF Series. However, VanEck Inflation is 1.07 times more volatile than ETF Series Solutions. It trades about 0.1 of its potential returns per unit of risk. ETF Series Solutions is currently generating about -0.26 per unit of risk. If you would invest  2,645  in VanEck Inflation Allocation on January 25, 2024 and sell it today you would earn a total of  52.00  from holding VanEck Inflation Allocation or generate 1.97% return on investment over 90 days.

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

VanEck Inflation Allocation  vs.  ETF Series Solutions

VanEck Inflation All

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Inflation Allocation are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, VanEck Inflation may actually be approaching a critical reversion point that can send shares even higher in May 2024.

ETF Series Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ETF Series Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, ETF Series is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with VanEck Inflation and ETF Series

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

The idea behind VanEck Inflation Allocation and ETF Series Solutions 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 Transaction History module to view history of all your transactions and understand their impact on performance.