Correlation Between VanEck Gold and IQIYI

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Can any of the company-specific risk be diversified away by investing in both VanEck Gold and IQIYI 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 Gold and IQIYI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VanEck Gold Miners and IQIYI Inc, you can compare the effects of market volatilities on VanEck Gold and IQIYI 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 Gold with a short position of IQIYI. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Gold and IQIYI.

Diversification Opportunities for VanEck Gold and IQIYI

0.78
  Correlation Coefficient

Poor diversification

The 3 months correlation between VanEck and IQIYI is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Gold Miners and IQIYI Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQIYI Inc and VanEck Gold 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 Gold Miners are associated (or correlated) with IQIYI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IQIYI Inc has no effect on the direction of VanEck Gold i.e., VanEck Gold and IQIYI go up and down completely randomly.

Pair Corralation between VanEck Gold and IQIYI

Considering the 90-day investment horizon VanEck Gold Miners is expected to generate 0.66 times more return on investment than IQIYI. However, VanEck Gold Miners is 1.51 times less risky than IQIYI. It trades about 0.09 of its potential returns per unit of risk. IQIYI Inc is currently generating about -0.03 per unit of risk. If you would invest  2,557  in VanEck Gold Miners on December 29, 2023 and sell it today you would earn a total of  583.00  from holding VanEck Gold Miners or generate 22.8% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy99.19%
ValuesDaily Returns

VanEck Gold Miners  vs.  IQIYI Inc

 Performance 
       Timeline  
VanEck Gold Miners 

Risk-Adjusted Performance

1 of 100

 
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Weak
Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Gold Miners are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, VanEck Gold is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.
IQIYI Inc 

Risk-Adjusted Performance

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Low
 
High
Very Weak
Over the last 90 days IQIYI Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

VanEck Gold and IQIYI Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with VanEck Gold and IQIYI

The main advantage of trading using opposite VanEck Gold and IQIYI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Gold position performs unexpectedly, IQIYI 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 IQIYI will offset losses from the drop in IQIYI's long position.
The idea behind VanEck Gold Miners and IQIYI Inc 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.
Check out your portfolio center.
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.

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