Correlation Between VanEck Emerging and IShares JP
Can any of the company-specific risk be diversified away by investing in both VanEck Emerging and IShares JP 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 Emerging and IShares JP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VanEck Emerging Markets and iShares JP Morgan, you can compare the effects of market volatilities on VanEck Emerging and IShares JP 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 Emerging with a short position of IShares JP. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Emerging and IShares JP.
Diversification Opportunities for VanEck Emerging and IShares JP
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between VanEck and IShares is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Emerging Markets and iShares JP Morgan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares JP Morgan and VanEck Emerging 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 Emerging Markets are associated (or correlated) with IShares JP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares JP Morgan has no effect on the direction of VanEck Emerging i.e., VanEck Emerging and IShares JP go up and down completely randomly.
Pair Corralation between VanEck Emerging and IShares JP
Given the investment horizon of 90 days VanEck Emerging is expected to generate 1.11 times less return on investment than IShares JP. But when comparing it to its historical volatility, VanEck Emerging Markets is 1.27 times less risky than IShares JP. It trades about 0.35 of its potential returns per unit of risk. iShares JP Morgan is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 3,810 in iShares JP Morgan on November 18, 2024 and sell it today you would earn a total of 63.00 from holding iShares JP Morgan or generate 1.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
VanEck Emerging Markets vs. iShares JP Morgan
Performance |
| Timeline |
| VanEck Emerging Markets |
| iShares JP Morgan |
VanEck Emerging and IShares JP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VanEck Emerging and IShares JP
The main advantage of trading using opposite VanEck Emerging and IShares JP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Emerging position performs unexpectedly, IShares JP 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 JP will offset losses from the drop in IShares JP's long position.| VanEck Emerging vs. VanEck Vectors Moodys | VanEck Emerging vs. BondBloxx ETF Trust | VanEck Emerging vs. Vanguard ESG Corporate | VanEck Emerging vs. Pacer Cash Cows |
| IShares JP vs. VanEck Emerging Markets | IShares JP vs. iShares Intl High | IShares JP vs. iShares JP Morgan | IShares JP vs. iShares International High |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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