Correlation Between Vanguard World and Vaneck Vectors

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

By analyzing existing cross correlation between Vanguard World and Vaneck Vectors Investment, you can compare the effects of market volatilities on Vanguard World 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 Vanguard World with a short position of Vaneck Vectors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard World and Vaneck Vectors.

Diversification Opportunities for Vanguard World and Vaneck Vectors

0.9

Correlation Coefficient

Vanguard World  Vaneck Vectors

Almost no diversification

The 3 months correlation between Vanguard and Vaneck is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard World and Vaneck Vectors Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vaneck Vectors Investment and Vanguard World 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 Vanguard World 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 Investment has no effect on the direction of Vanguard World i.e., Vanguard World and Vaneck Vectors go up and down completely randomly.

Pair Corralation between Vanguard World and Vaneck Vectors

Assuming the 90 days trading horizon Vanguard World is expected to generate 10.81 times more return on investment than Vaneck Vectors. However, Vanguard World is 10.81 times more volatile than Vaneck Vectors Investment. It trades about 0.26 of its potential returns per unit of risk. Vaneck Vectors Investment is currently generating about 0.22 per unit of risk. If you would invest  1,062,851  in Vanguard World on April 25, 2025 and sell it today you would earn a total of  205,024  from holding Vanguard World or generate 19.29% return on investment over 90 days.

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

Vanguard World  vs.  Vaneck Vectors Investment

Vanguard World

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard World are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Vanguard World showed solid returns over the last few months and may actually be approaching a breakup point.

Vaneck Vectors Investment

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vaneck Vectors Investment are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Vaneck Vectors is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vanguard World and Vaneck Vectors

The main advantage of trading using opposite Vanguard World and Vaneck Vectors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard World 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 Vanguard World and Vaneck Vectors Investment 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.