Correlation Between VanEck Oil and IShares MSCI

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Can any of the company-specific risk be diversified away by investing in both VanEck Oil and IShares MSCI 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 Oil and IShares MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VanEck Oil Services and iShares MSCI Spain, you can compare the effects of market volatilities on VanEck Oil and IShares MSCI 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 Oil with a short position of IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Oil and IShares MSCI.

Diversification Opportunities for VanEck Oil and IShares MSCI

-0.43
  Correlation Coefficient

Very good diversification

The 3 months correlation between VanEck and IShares is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Oil Services and iShares MSCI Spain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI Spain and VanEck Oil 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 Oil Services are associated (or correlated) with IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI Spain has no effect on the direction of VanEck Oil i.e., VanEck Oil and IShares MSCI go up and down completely randomly.

Pair Corralation between VanEck Oil and IShares MSCI

Considering the 90-day investment horizon VanEck Oil Services is expected to generate 1.73 times more return on investment than IShares MSCI. However, VanEck Oil is 1.73 times more volatile than iShares MSCI Spain. It trades about 0.08 of its potential returns per unit of risk. iShares MSCI Spain is currently generating about -0.02 per unit of risk. If you would invest  27,976  in VanEck Oil Services on September 5, 2024 and sell it today you would earn a total of  2,339  from holding VanEck Oil Services or generate 8.36% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

VanEck Oil Services  vs.  iShares MSCI Spain

 Performance 
       Timeline  
VanEck Oil Services 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Oil Services are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward indicators, VanEck Oil may actually be approaching a critical reversion point that can send shares even higher in January 2025.
iShares MSCI Spain 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days iShares MSCI Spain has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, IShares MSCI is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

VanEck Oil and IShares MSCI Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with VanEck Oil and IShares MSCI

The main advantage of trading using opposite VanEck Oil and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Oil position performs unexpectedly, IShares MSCI 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 MSCI will offset losses from the drop in IShares MSCI's long position.
The idea behind VanEck Oil Services and iShares MSCI Spain 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..

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