Correlation Between IShares MSCI and VanEck Indonesia
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and VanEck Indonesia 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 IShares MSCI and VanEck Indonesia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares MSCI United and VanEck Indonesia Index, you can compare the effects of market volatilities on IShares MSCI and VanEck Indonesia 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 IShares MSCI with a short position of VanEck Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and VanEck Indonesia.
Diversification Opportunities for IShares MSCI and VanEck Indonesia
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and VanEck is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI United and VanEck Indonesia Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Indonesia Index and IShares MSCI 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 iShares MSCI United are associated (or correlated) with VanEck Indonesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Indonesia Index has no effect on the direction of IShares MSCI i.e., IShares MSCI and VanEck Indonesia go up and down completely randomly.
Pair Corralation between IShares MSCI and VanEck Indonesia
Considering the 90-day investment horizon iShares MSCI United is expected to generate 0.77 times more return on investment than VanEck Indonesia. However, iShares MSCI United is 1.3 times less risky than VanEck Indonesia. It trades about -0.04 of its potential returns per unit of risk. VanEck Indonesia Index is currently generating about -0.26 per unit of risk. If you would invest 3,587 in iShares MSCI United on August 31, 2024 and sell it today you would lose (30.00) from holding iShares MSCI United or give up 0.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares MSCI United vs. VanEck Indonesia Index
Performance |
| Timeline |
| iShares MSCI United |
| VanEck Indonesia Index |
IShares MSCI and VanEck Indonesia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and VanEck Indonesia
The main advantage of trading using opposite IShares MSCI and VanEck Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, VanEck Indonesia 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 Indonesia will offset losses from the drop in VanEck Indonesia's long position.| IShares MSCI vs. Global X MSCI | IShares MSCI vs. iShares MSCI Germany | IShares MSCI vs. iShares Europe ETF | IShares MSCI vs. iShares Russell 1000 |
| VanEck Indonesia vs. iShares MSCI Thailand | VanEck Indonesia vs. iShares MSCI Chile | VanEck Indonesia vs. iShares MSCI Turkey | VanEck Indonesia vs. Global X MSCI |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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