Correlation Between IShares Core and VanEck Global

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

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

Diversification Opportunities for IShares Core and VanEck Global

0.16

Correlation Coefficient

IShares Core  VanEck Global

Average diversification

The 3 months correlation between IShares and VanEck is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core MSCI and VanEck Global Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Global Real and IShares Core 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 Core MSCI are associated (or correlated) with VanEck Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Global Real has no effect on the direction of IShares Core i.e., IShares Core and VanEck Global go up and down completely randomly.

Pair Corralation between IShares Core and VanEck Global

Assuming the 90 days trading horizon iShares Core MSCI is expected to under-perform the VanEck Global. But the etf apears to be less risky and, when comparing its historical volatility, iShares Core MSCI is 1.18 times less risky than VanEck Global. The etf trades about -0.09 of its potential returns per unit of risk. The VanEck Global Real is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  4,011  in VanEck Global Real on September 26, 2024 and sell it today you would lose (141.00) from holding VanEck Global Real or give up 3.52% of portfolio value over 90 days.

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

iShares Core MSCI  vs.  VanEck Global Real

iShares Core MSCI

Risk-Adjusted Performance

0 of 100

Very Weak

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

VanEck Global Real

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with IShares Core and VanEck Global

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

The idea behind iShares Core MSCI and VanEck Global Real 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.