Correlation Between VanEck Polkadot and IShares MSCI

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

Diversification Opportunities for VanEck Polkadot and IShares MSCI

0.76

Correlation Coefficient

VanEck Polkadot  IShares MSCI

Poor diversification

The 3 months correlation between VanEck and IShares is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Polkadot ETN and iShares MSCI World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI World and VanEck Polkadot 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 Polkadot ETN 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 World has no effect on the direction of VanEck Polkadot i.e., VanEck Polkadot and IShares MSCI go up and down completely randomly.

Pair Corralation between VanEck Polkadot and IShares MSCI

Assuming the 90 days trading horizon VanEck Polkadot ETN is expected to generate 13.39 times more return on investment than IShares MSCI. However, VanEck Polkadot is 13.39 times more volatile than iShares MSCI World. It trades about 0.15 of its potential returns per unit of risk. iShares MSCI World is currently generating about 0.27 per unit of risk. If you would invest  146.00  in VanEck Polkadot ETN on September 13, 2024 and sell it today you would earn a total of  139.00  from holding VanEck Polkadot ETN or generate 95.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

VanEck Polkadot ETN  vs.  iShares MSCI World

VanEck Polkadot ETN

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Polkadot ETN are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, VanEck Polkadot unveiled solid returns over the last few months and may actually be approaching a breakup point.

iShares MSCI World

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI World are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, IShares MSCI may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with VanEck Polkadot and IShares MSCI

The main advantage of trading using opposite VanEck Polkadot and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Polkadot 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 Polkadot ETN and iShares MSCI 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.