Correlation Between VanEck Vectors and VanEck Morningstar

Can any of the company-specific risk be diversified away by investing in both VanEck Vectors and VanEck Morningstar 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 VanEck Morningstar 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 VanEck Morningstar International, you can compare the effects of market volatilities on VanEck Vectors and VanEck Morningstar 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 VanEck Morningstar. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Vectors and VanEck Morningstar.

Diversification Opportunities for VanEck Vectors and VanEck Morningstar

0.82

Correlation Coefficient

VanEck Vectors  VanEck Morningstar

Very poor diversification

The 3 months correlation between VanEck and VanEck is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Vectors ETF and VanEck Morningstar Internation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Morningstar 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 VanEck Morningstar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Morningstar has no effect on the direction of VanEck Vectors i.e., VanEck Vectors and VanEck Morningstar go up and down completely randomly.

Pair Corralation between VanEck Vectors and VanEck Morningstar

Given the investment horizon of 90 days VanEck Vectors ETF is expected to generate 0.61 times more return on investment than VanEck Morningstar. However, VanEck Vectors ETF is 1.64 times less risky than VanEck Morningstar. It trades about 0.17 of its potential returns per unit of risk. VanEck Morningstar International is currently generating about -0.03 per unit of risk. If you would invest  3,884  in VanEck Vectors ETF on September 2, 2024 and sell it today you would earn a total of  98.00  from holding VanEck Vectors ETF or generate 2.52% return on investment over 90 days.

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

VanEck Vectors ETF  vs.  VanEck Morningstar Internation

VanEck Vectors ETF

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Vectors ETF are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, VanEck Vectors is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

VanEck Morningstar

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Morningstar International are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, VanEck Morningstar is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with VanEck Vectors and VanEck Morningstar

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

The idea behind VanEck Vectors ETF and VanEck Morningstar International 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.