Correlation Between VanEck Vectors and Global X

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

By analyzing existing cross correlation between VanEck Vectors ETF and Global X MSCI, you can compare the effects of market volatilities on VanEck Vectors and Global X 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 Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Vectors and Global X.

Diversification Opportunities for VanEck Vectors and Global X

-0.72

Correlation Coefficient

VanEck Vectors  Global X

Pay attention - limited upside

The 3 months correlation between VanEck and Global is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Vectors ETF and Global X MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X MSCI 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 ETF are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X MSCI has no effect on the direction of VanEck Vectors i.e., VanEck Vectors and Global X go up and down completely randomly.

Pair Corralation between VanEck Vectors and Global X

Considering the 90-day investment horizon VanEck Vectors ETF is expected to generate 0.16 times more return on investment than Global X. However, VanEck Vectors ETF is 6.15 times less risky than Global X. It trades about 0.09 of its potential returns per unit of risk. Global X MSCI is currently generating about -0.1 per unit of risk. If you would invest  4,558  in VanEck Vectors ETF on February 5, 2024 and sell it today you would earn a total of  21.00  from holding VanEck Vectors ETF or generate 0.46% return on investment over 90 days.

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

VanEck Vectors ETF  vs.  Global X MSCI

VanEck Vectors ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VanEck Vectors ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong primary indicators, VanEck Vectors is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Global X MSCI

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global X MSCI are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Global X may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with VanEck Vectors and Global X

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

The idea behind VanEck Vectors ETF and Global X MSCI 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.