Correlation Between VanEck Biotech and Health Care

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both VanEck Biotech and Health Care 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 Biotech and Health Care into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VanEck Biotech ETF and Health Care Select, you can compare the effects of market volatilities on VanEck Biotech and Health Care 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 Biotech with a short position of Health Care. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Biotech and Health Care.

Diversification Opportunities for VanEck Biotech and Health Care

-0.15
  Correlation Coefficient

Good diversification

The 3 months correlation between VanEck and Health is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Biotech ETF and Health Care Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Health Care Select and VanEck Biotech 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 Biotech ETF are associated (or correlated) with Health Care. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Health Care Select has no effect on the direction of VanEck Biotech i.e., VanEck Biotech and Health Care go up and down completely randomly.

Pair Corralation between VanEck Biotech and Health Care

Considering the 90-day investment horizon VanEck Biotech is expected to generate 1.61 times less return on investment than Health Care. In addition to that, VanEck Biotech is 1.44 times more volatile than Health Care Select. It trades about 0.02 of its total potential returns per unit of risk. Health Care Select is currently generating about 0.05 per unit of volatility. If you would invest  12,672  in Health Care Select on December 29, 2023 and sell it today you would earn a total of  2,099  from holding Health Care Select or generate 16.56% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

VanEck Biotech ETF  vs.  Health Care Select

 Performance 
       Timeline  
VanEck Biotech ETF 

Risk-Adjusted Performance

1 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Biotech ETF are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental drivers, VanEck Biotech is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.
Health Care Select 

Risk-Adjusted Performance

18 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Health Care Select are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal essential indicators, Health Care may actually be approaching a critical reversion point that can send shares even higher in April 2024.

VanEck Biotech and Health Care Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with VanEck Biotech and Health Care

The main advantage of trading using opposite VanEck Biotech and Health Care positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Biotech position performs unexpectedly, Health Care 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 Health Care will offset losses from the drop in Health Care's long position.
The idea behind VanEck Biotech ETF and Health Care Select 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.

Other Complementary Tools

Idea Analyzer
Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas
Price Ceiling Movement
Calculate and plot Price Ceiling Movement for different equity instruments
Companies Directory
Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals
Theme Ratings
Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance
Efficient Frontier
Plot and analyze your portfolio and positions against risk-return landscape of the market.
Top Crypto Exchanges
Search and analyze digital assets across top global cryptocurrency exchanges