Correlation Between VanEck FTSE and IShares Core
Can any of the company-specific risk be diversified away by investing in both VanEck FTSE and IShares Core 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 IShares Core 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 iShares Core MSCI, you can compare the effects of market volatilities on VanEck FTSE and IShares Core 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 IShares Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck FTSE and IShares Core.
Diversification Opportunities for VanEck FTSE and IShares Core
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between VanEck and IShares is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding VanEck FTSE China and iShares Core MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core MSCI 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 IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core MSCI has no effect on the direction of VanEck FTSE i.e., VanEck FTSE and IShares Core go up and down completely randomly.
Pair Corralation between VanEck FTSE and IShares Core
Assuming the 90 days trading horizon VanEck FTSE is expected to generate 5.49 times less return on investment than IShares Core. In addition to that, VanEck FTSE is 1.55 times more volatile than iShares Core MSCI. It trades about 0.01 of its total potential returns per unit of risk. iShares Core MSCI is currently generating about 0.1 per unit of volatility. If you would invest 3,564 in iShares Core MSCI on August 29, 2024 and sell it today you would earn a total of 1,836 from holding iShares Core MSCI or generate 51.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
VanEck FTSE China vs. iShares Core MSCI
Performance |
| Timeline |
| VanEck FTSE China |
| iShares Core MSCI |
VanEck FTSE and IShares Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VanEck FTSE and IShares Core
The main advantage of trading using opposite VanEck FTSE and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck FTSE position performs unexpectedly, IShares Core 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 Core will offset losses from the drop in IShares Core's long position.| VanEck FTSE vs. Betashares Asia Technology | VanEck FTSE vs. CD Private Equity | VanEck FTSE vs. BetaShares Australia 200 | VanEck FTSE vs. Australian High Interest |
| IShares Core vs. Betashares Asia Technology | IShares Core vs. CD Private Equity | IShares Core vs. BetaShares Australia 200 | IShares Core vs. Australian High Interest |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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