Correlation Between IShares Infrastructure and VanEck Green

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

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

Diversification Opportunities for IShares Infrastructure and VanEck Green

0.55

Correlation Coefficient

IShares Infrastructure  VanEck Green

Very weak diversification

The 3 months correlation between IShares and VanEck is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding iShares Infrastructure ETF and VanEck Green Infrastructure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Green Infrast and IShares Infrastructure 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 Infrastructure ETF are associated (or correlated) with VanEck Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Green Infrast has no effect on the direction of IShares Infrastructure i.e., IShares Infrastructure and VanEck Green go up and down completely randomly.

Pair Corralation between IShares Infrastructure and VanEck Green

Given the investment horizon of 90 days IShares Infrastructure is expected to generate 10.42 times less return on investment than VanEck Green. But when comparing it to its historical volatility, iShares Infrastructure ETF is 1.11 times less risky than VanEck Green. It trades about 0.0 of its potential returns per unit of risk. VanEck Green Infrastructure is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,534  in VanEck Green Infrastructure on September 22, 2024 and sell it today you would earn a total of  22.00  from holding VanEck Green Infrastructure or generate 0.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

iShares Infrastructure ETF  vs.  VanEck Green Infrastructure

iShares Infrastructure

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Infrastructure ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, IShares Infrastructure is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

VanEck Green Infrast

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Green Infrastructure are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable technical and fundamental indicators, VanEck Green is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with IShares Infrastructure and VanEck Green

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

The idea behind iShares Infrastructure ETF and VanEck Green Infrastructure 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.