Correlation Between VanEck Low and SPDR Kensho

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

By analyzing existing cross correlation between VanEck Low Carbon and SPDR Kensho Clean, you can compare the effects of market volatilities on VanEck Low and SPDR Kensho 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 Low with a short position of SPDR Kensho. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Low and SPDR Kensho.

Diversification Opportunities for VanEck Low and SPDR Kensho

0.93

Correlation Coefficient

VanEck Low  SPDR Kensho

Almost no diversification

The 3 months correlation between VanEck and SPDR is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Low Carbon and SPDR Kensho Clean in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Kensho Clean and VanEck Low 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 Low Carbon are associated (or correlated) with SPDR Kensho. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Kensho Clean has no effect on the direction of VanEck Low i.e., VanEck Low and SPDR Kensho go up and down completely randomly.

Pair Corralation between VanEck Low and SPDR Kensho

Given the investment horizon of 90 days VanEck Low is expected to generate 3.34 times less return on investment than SPDR Kensho. But when comparing it to its historical volatility, VanEck Low Carbon is 1.72 times less risky than SPDR Kensho. It trades about 0.12 of its potential returns per unit of risk. SPDR Kensho Clean is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  5,005  in SPDR Kensho Clean on May 5, 2025 and sell it today you would earn a total of  1,586  from holding SPDR Kensho Clean or generate 31.69% return on investment over 90 days.

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

VanEck Low Carbon  vs.  SPDR Kensho Clean

VanEck Low Carbon

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Low Carbon are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, VanEck Low may actually be approaching a critical reversion point that can send shares even higher in September 2025.

SPDR Kensho Clean

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Kensho Clean are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, SPDR Kensho reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VanEck Low and SPDR Kensho

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

The idea behind VanEck Low Carbon and SPDR Kensho Clean 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.