Correlation Between VanEck Morningstar and IShares Core

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

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

Diversification Opportunities for VanEck Morningstar and IShares Core

0.94

Correlation Coefficient

VanEck Morningstar  IShares Core

Almost no diversification

The 3 months correlation between VanEck and IShares is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Morningstar Wide and iShares Core SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core SP and VanEck Morningstar 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 Morningstar Wide are associated (or correlated) with IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core SP has no effect on the direction of VanEck Morningstar i.e., VanEck Morningstar and IShares Core go up and down completely randomly.

Pair Corralation between VanEck Morningstar and IShares Core

Assuming the 90 days trading horizon VanEck Morningstar Wide is expected to generate 0.73 times more return on investment than IShares Core. However, VanEck Morningstar Wide is 1.37 times less risky than IShares Core. It trades about 0.09 of its potential returns per unit of risk. iShares Core SP is currently generating about -0.18 per unit of risk. If you would invest  13,108  in VanEck Morningstar Wide on September 25, 2024 and sell it today you would earn a total of  167.00  from holding VanEck Morningstar Wide or generate 1.27% return on investment over 90 days.

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

VanEck Morningstar Wide  vs.  iShares Core SP

VanEck Morningstar Wide

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Morningstar Wide are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, VanEck Morningstar may actually be approaching a critical reversion point that can send shares even higher in January 2025.

iShares Core SP

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core SP are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, IShares Core may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with VanEck Morningstar and IShares Core

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

The idea behind VanEck Morningstar Wide and iShares Core SP 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.