Correlation Between SPDR Kensho and VanEck Vectors

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

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

Diversification Opportunities for SPDR Kensho and VanEck Vectors

0.27

Correlation Coefficient

SPDR Kensho  VanEck Vectors

Modest diversification

The 3 months correlation between SPDR and VanEck is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Kensho Intelligent and VanEck Vectors ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Vectors ETF and SPDR Kensho 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 SPDR Kensho Intelligent are associated (or correlated) with VanEck Vectors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Vectors ETF has no effect on the direction of SPDR Kensho i.e., SPDR Kensho and VanEck Vectors go up and down completely randomly.

Pair Corralation between SPDR Kensho and VanEck Vectors

Given the investment horizon of 90 days SPDR Kensho Intelligent is expected to generate 0.73 times more return on investment than VanEck Vectors. However, SPDR Kensho Intelligent is 1.37 times less risky than VanEck Vectors. It trades about 0.02 of its potential returns per unit of risk. VanEck Vectors ETF is currently generating about -0.01 per unit of risk. If you would invest  3,483  in SPDR Kensho Intelligent on September 12, 2024 and sell it today you would earn a total of  271.00  from holding SPDR Kensho Intelligent or generate 7.78% return on investment over 90 days.

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

SPDR Kensho Intelligent  vs.  VanEck Vectors ETF

SPDR Kensho Intelligent

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Kensho Intelligent are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady forward indicators, SPDR Kensho demonstrated solid returns over the last few months and may actually be approaching a breakup point.

VanEck Vectors ETF

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Vectors ETF are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent technical and fundamental indicators, VanEck Vectors may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with SPDR Kensho and VanEck Vectors

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

The idea behind SPDR Kensho Intelligent and VanEck Vectors 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.