Correlation Between IShares MSCI and VanEck Brazil
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and VanEck Brazil 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 Brazil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares MSCI South and VanEck Brazil Small Cap, you can compare the effects of market volatilities on IShares MSCI and VanEck Brazil 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 Brazil. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and VanEck Brazil.
Diversification Opportunities for IShares MSCI and VanEck Brazil
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and VanEck is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI South and VanEck Brazil Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Brazil Small 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 South are associated (or correlated) with VanEck Brazil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Brazil Small has no effect on the direction of IShares MSCI i.e., IShares MSCI and VanEck Brazil go up and down completely randomly.
Pair Corralation between IShares MSCI and VanEck Brazil
Considering the 90-day investment horizon IShares MSCI is expected to generate 1.47 times less return on investment than VanEck Brazil. But when comparing it to its historical volatility, iShares MSCI South is 1.24 times less risky than VanEck Brazil. It trades about 0.01 of its potential returns per unit of risk. VanEck Brazil Small Cap is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,291 in VanEck Brazil Small Cap on August 24, 2024 and sell it today you would earn a total of 72.00 from holding VanEck Brazil Small Cap or generate 5.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares MSCI South vs. VanEck Brazil Small Cap
Performance |
| Timeline |
| iShares MSCI South |
| VanEck Brazil Small |
IShares MSCI and VanEck Brazil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and VanEck Brazil
The main advantage of trading using opposite IShares MSCI and VanEck Brazil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, VanEck Brazil 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 Brazil will offset losses from the drop in VanEck Brazil's long position.| IShares MSCI vs. iShares MSCI Malaysia | IShares MSCI vs. iShares MSCI Hong | IShares MSCI vs. HUMANA INC | IShares MSCI vs. SCOR PK |
| 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 |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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