Correlation Between IPath Series and VanEck Digital

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

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

Diversification Opportunities for IPath Series and VanEck Digital

-0.74

Correlation Coefficient

IPath Series  VanEck Digital

Pay attention - limited upside

The 3 months correlation between IPath and VanEck is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding iPath Series B 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 IPath Series 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 iPath Series B 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 IPath Series i.e., IPath Series and VanEck Digital go up and down completely randomly.

Pair Corralation between IPath Series and VanEck Digital

Considering the 90-day investment horizon IPath Series is expected to generate 1.09 times less return on investment than VanEck Digital. But when comparing it to its historical volatility, iPath Series B is 1.15 times less risky than VanEck Digital. It trades about 0.12 of its potential returns per unit of risk. VanEck Digital Transformation is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  992.00  in VanEck Digital Transformation on February 1, 2025 and sell it today you would earn a total of  112.00  from holding VanEck Digital Transformation or generate 11.29% return on investment over 90 days.

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

iPath Series B  vs.  VanEck Digital Transformation

iPath Series B

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iPath Series B are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, IPath Series showed 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 IPath Series and VanEck Digital

The main advantage of trading using opposite IPath Series and VanEck Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPath Series 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 iPath Series B 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.

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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.