Correlation Between VanEck FTSE and VanEck MSCI
Can any of the company-specific risk be diversified away by investing in both VanEck FTSE and VanEck 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 FTSE and VanEck MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VanEck FTSE China and VanEck MSCI Australian, you can compare the effects of market volatilities on VanEck FTSE and VanEck 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 FTSE with a short position of VanEck MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck FTSE and VanEck MSCI.
Diversification Opportunities for VanEck FTSE and VanEck MSCI
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between VanEck and VanEck is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding VanEck FTSE China and VanEck MSCI Australian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck MSCI Australian and VanEck FTSE 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 FTSE China are associated (or correlated) with VanEck MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck MSCI Australian has no effect on the direction of VanEck FTSE i.e., VanEck FTSE and VanEck MSCI go up and down completely randomly.
Pair Corralation between VanEck FTSE and VanEck MSCI
Assuming the 90 days trading horizon VanEck FTSE China is expected to generate 1.64 times more return on investment than VanEck MSCI. However, VanEck FTSE is 1.64 times more volatile than VanEck MSCI Australian. It trades about 0.08 of its potential returns per unit of risk. VanEck MSCI Australian is currently generating about -0.02 per unit of risk. If you would invest 5,450 in VanEck FTSE China on October 26, 2024 and sell it today you would earn a total of 199.00 from holding VanEck FTSE China or generate 3.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
VanEck FTSE China vs. VanEck MSCI Australian
Performance |
| Timeline |
| VanEck FTSE China |
| VanEck MSCI Australian |
VanEck FTSE and VanEck MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VanEck FTSE and VanEck MSCI
The main advantage of trading using opposite VanEck FTSE and VanEck MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck FTSE position performs unexpectedly, VanEck 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 VanEck MSCI will offset losses from the drop in VanEck MSCI's long position.| VanEck FTSE vs. VanEck Vectors Australian | VanEck FTSE vs. VanEck MSCI International | VanEck FTSE vs. VanEck Global Clean | VanEck FTSE vs. VanEck MSCI Australian |
| VanEck MSCI vs. VanEck Vectors Australian | VanEck MSCI vs. VanEck FTSE China | VanEck MSCI vs. VanEck MSCI International | VanEck MSCI vs. VanEck Global Clean |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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