Correlation Between Major Drilling and VanEck Digital

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

By analyzing existing cross correlation between Major Drilling Group and VanEck Digital Transformation, you can compare the effects of market volatilities on Major Drilling and VanEck Digital 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 Major Drilling with a short position of VanEck Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Major Drilling and VanEck Digital.

Diversification Opportunities for Major Drilling and VanEck Digital

0.58

Correlation Coefficient

Major Drilling  VanEck Digital

Very weak diversification

The 3 months correlation between Major and VanEck is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Major Drilling Group and VanEck Digital Transformation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Digital Trans and Major Drilling 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 Major Drilling Group are associated (or correlated) with VanEck Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Digital Trans has no effect on the direction of Major Drilling i.e., Major Drilling and VanEck Digital go up and down completely randomly.

Pair Corralation between Major Drilling and VanEck Digital

Assuming the 90 days horizon Major Drilling Group is expected to generate 0.73 times more return on investment than VanEck Digital. However, Major Drilling Group is 1.38 times less risky than VanEck Digital. It trades about 0.06 of its potential returns per unit of risk. VanEck Digital Transformation is currently generating about -0.08 per unit of risk. If you would invest  569.00  in Major Drilling Group on February 1, 2025 and sell it today you would earn a total of  61.00  from holding Major Drilling Group or generate 10.72% return on investment over 90 days.

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

Major Drilling Group  vs.  VanEck Digital Transformation

Major Drilling Group

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Major Drilling Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Major Drilling reported solid returns over the last few months and may actually be approaching a breakup point.

VanEck Digital Trans

Risk-Adjusted Performance

Very Weak

Over the last 90 days VanEck Digital Transformation has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Etf's basic indicators remain relatively invariable which may send shares a bit higher in June 2025. The latest agitation may also be a sign of long-running up-swing for the ETF retail investors.

Pair Trading with Major Drilling and VanEck Digital

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

The idea behind Major Drilling Group and VanEck Digital Transformation 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.