Correlation Between IShares AEX and VanEck AMX

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

By analyzing existing cross correlation between iShares AEX UCITS and VanEck AMX UCITS, you can compare the effects of market volatilities on IShares AEX and VanEck AMX 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 IShares AEX with a short position of VanEck AMX. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares AEX and VanEck AMX.

Diversification Opportunities for IShares AEX and VanEck AMX

0.65

Correlation Coefficient

IShares AEX  VanEck AMX

Poor diversification

The 3 months correlation between IShares and VanEck is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding iShares AEX UCITS and VanEck AMX UCITS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck AMX UCITS and IShares AEX 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 iShares AEX UCITS are associated (or correlated) with VanEck AMX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck AMX UCITS has no effect on the direction of IShares AEX i.e., IShares AEX and VanEck AMX go up and down completely randomly.

Pair Corralation between IShares AEX and VanEck AMX

Assuming the 90 days trading horizon iShares AEX UCITS is expected to generate 0.97 times more return on investment than VanEck AMX. However, iShares AEX UCITS is 1.03 times less risky than VanEck AMX. It trades about -0.08 of its potential returns per unit of risk. VanEck AMX UCITS is currently generating about -0.14 per unit of risk. If you would invest  9,037  in iShares AEX UCITS on September 25, 2024 and sell it today you would lose (335.00) from holding iShares AEX UCITS or give up 3.71% of portfolio value over 90 days.

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

iShares AEX UCITS  vs.  VanEck AMX UCITS

iShares AEX UCITS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares AEX UCITS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, IShares AEX is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

VanEck AMX UCITS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VanEck AMX UCITS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Etf's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Pair Trading with IShares AEX and VanEck AMX

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

The idea behind iShares AEX UCITS and VanEck AMX UCITS 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.