Correlation Between IShares Core and VanEck Sustainable

Can any of the company-specific risk be diversified away by investing in both IShares Core and VanEck Sustainable 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 Sustainable 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 Sustainable World, you can compare the effects of market volatilities on IShares Core and VanEck Sustainable 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 Sustainable. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and VanEck Sustainable.

Diversification Opportunities for IShares Core and VanEck Sustainable

-0.13

Correlation Coefficient

IShares Core  VanEck Sustainable

Good diversification

The 3 months correlation between IShares and VanEck is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core MSCI and VanEck Sustainable World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Sustainable World 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 Sustainable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Sustainable World has no effect on the direction of IShares Core i.e., IShares Core and VanEck Sustainable go up and down completely randomly.

Pair Corralation between IShares Core and VanEck Sustainable

Assuming the 90 days trading horizon iShares Core MSCI is expected to generate 1.17 times more return on investment than VanEck Sustainable. However, IShares Core is 1.17 times more volatile than VanEck Sustainable World. It trades about -0.06 of its potential returns per unit of risk. VanEck Sustainable World is currently generating about -0.12 per unit of risk. If you would invest  3,160  in iShares Core MSCI on September 26, 2024 and sell it today you would lose (22.00) from holding iShares Core MSCI or give up 0.7% of portfolio value over 90 days.

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

iShares Core MSCI  vs.  VanEck Sustainable World

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 Sustainable World

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Sustainable World are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, VanEck Sustainable 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 Sustainable

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

The idea behind iShares Core MSCI and VanEck Sustainable World 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.