Correlation Between VanEck Brazil and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both VanEck Brazil 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 Brazil 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 Brazil Small Cap and iShares MSCI Poland, you can compare the effects of market volatilities on VanEck Brazil 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 Brazil with a short position of IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Brazil and IShares MSCI.
Diversification Opportunities for VanEck Brazil and IShares MSCI
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between VanEck and IShares is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Brazil Small Cap and iShares MSCI Poland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI Poland and VanEck Brazil 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 Brazil Small Cap 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 Poland has no effect on the direction of VanEck Brazil i.e., VanEck Brazil and IShares MSCI go up and down completely randomly.
Pair Corralation between VanEck Brazil and IShares MSCI
Considering the 90-day investment horizon VanEck Brazil Small Cap is expected to generate 0.8 times more return on investment than IShares MSCI. However, VanEck Brazil Small Cap is 1.25 times less risky than IShares MSCI. It trades about -0.07 of its potential returns per unit of risk. iShares MSCI Poland is currently generating about -0.08 per unit of risk. If you would invest 1,404 in VanEck Brazil Small Cap on August 28, 2024 and sell it today you would lose (32.00) from holding VanEck Brazil Small Cap or give up 2.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
VanEck Brazil Small Cap vs. iShares MSCI Poland
Performance |
| Timeline |
| VanEck Brazil Small |
| iShares MSCI Poland |
VanEck Brazil and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VanEck Brazil and IShares MSCI
The main advantage of trading using opposite VanEck Brazil and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Brazil 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.| VanEck Brazil vs. iShares China Large Cap | VanEck Brazil vs. iShares MSCI Mexico | VanEck Brazil vs. iShares MSCI South | VanEck Brazil vs. iShares MSCI Japan |
| IShares MSCI vs. iShares MSCI Hong | IShares MSCI vs. HUMANA INC | IShares MSCI vs. SCOR PK | IShares MSCI vs. Aquagold International |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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