Correlation Between VanEck Defense and Vanguard Germany

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

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

Diversification Opportunities for VanEck Defense and Vanguard Germany

0.82

Correlation Coefficient

VanEck Defense  Vanguard Germany

Very poor diversification

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

Pair Corralation between VanEck Defense and Vanguard Germany

Assuming the 90 days trading horizon VanEck Defense ETF is expected to generate 1.34 times more return on investment than Vanguard Germany. However, VanEck Defense is 1.34 times more volatile than Vanguard Germany All. It trades about 0.25 of its potential returns per unit of risk. Vanguard Germany All is currently generating about 0.15 per unit of risk. If you would invest  3,622  in VanEck Defense ETF on April 24, 2025 and sell it today you would earn a total of  704.00  from holding VanEck Defense ETF or generate 19.44% return on investment over 90 days.

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

VanEck Defense ETF  vs.  Vanguard Germany All

VanEck Defense ETF

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Defense ETF are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, VanEck Defense unveiled solid returns over the last few months and may actually be approaching a breakup point.

Vanguard Germany All

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Germany All are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Vanguard Germany may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with VanEck Defense and Vanguard Germany

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

The idea behind VanEck Defense ETF and Vanguard Germany All 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.