Correlation Between VanEck Semiconductor and Austin Gold

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

By analyzing existing cross correlation between VanEck Semiconductor ETF and Austin Gold Corp, you can compare the effects of market volatilities on VanEck Semiconductor and Austin Gold 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 Semiconductor with a short position of Austin Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Semiconductor and Austin Gold.

Diversification Opportunities for VanEck Semiconductor and Austin Gold

0.57

Correlation Coefficient

VanEck Semiconductor  Austin Gold

Very weak diversification

The 3 months correlation between VanEck and Austin is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Semiconductor ETF and Austin Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Austin Gold Corp and VanEck Semiconductor 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 Semiconductor ETF are associated (or correlated) with Austin Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Austin Gold Corp has no effect on the direction of VanEck Semiconductor i.e., VanEck Semiconductor and Austin Gold go up and down completely randomly.

Pair Corralation between VanEck Semiconductor and Austin Gold

Considering the 90-day investment horizon VanEck Semiconductor is expected to generate 40.63 times less return on investment than Austin Gold. But when comparing it to its historical volatility, VanEck Semiconductor ETF is 7.86 times less risky than Austin Gold. It trades about 0.02 of its potential returns per unit of risk. Austin Gold Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  162.00  in Austin Gold Corp on August 17, 2024 and sell it today you would earn a total of  16.00  from holding Austin Gold Corp or generate 9.88% return on investment over 90 days.

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

VanEck Semiconductor ETF  vs.  Austin Gold Corp

VanEck Semiconductor ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VanEck Semiconductor ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong primary indicators, VanEck Semiconductor is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Austin Gold Corp

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Austin Gold Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Austin Gold unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VanEck Semiconductor and Austin Gold

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

The idea behind VanEck Semiconductor ETF and Austin Gold Corp 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.