Correlation Between VanEck Global and IShares MSCI

Can any of the company-specific risk be diversified away by investing in both VanEck Global 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 Global 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 Global Real and iShares MSCI USA, you can compare the effects of market volatilities on VanEck Global 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 Global with a short position of IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Global and IShares MSCI.

Diversification Opportunities for VanEck Global and IShares MSCI

0.43

Correlation Coefficient

VanEck Global  IShares MSCI

Very weak 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 Global Real and iShares MSCI USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI USA and VanEck Global 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 Global Real 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 USA has no effect on the direction of VanEck Global i.e., VanEck Global and IShares MSCI go up and down completely randomly.

Pair Corralation between VanEck Global and IShares MSCI

Assuming the 90 days trading horizon VanEck Global Real is expected to generate 0.87 times more return on investment than IShares MSCI. However, VanEck Global Real is 1.15 times less risky than IShares MSCI. It trades about 0.09 of its potential returns per unit of risk. iShares MSCI USA is currently generating about 0.07 per unit of risk. If you would invest  3,582  in VanEck Global Real on October 1, 2024 and sell it today you would earn a total of  298.00  from holding VanEck Global Real or generate 8.32% return on investment over 90 days.

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

VanEck Global Real  vs.  iShares MSCI USA

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.

iShares MSCI USA

Risk-Adjusted Performance

5 of 100

Modest

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

The main advantage of trading using opposite VanEck Global and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Global 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 Global Real and iShares MSCI USA 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.