Correlation Between VanEck Indonesia and VanEck Africa
Can any of the company-specific risk be diversified away by investing in both VanEck Indonesia and VanEck Africa 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 Indonesia and VanEck Africa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VanEck Indonesia Index and VanEck Africa Index, you can compare the effects of market volatilities on VanEck Indonesia and VanEck Africa 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 Indonesia with a short position of VanEck Africa. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Indonesia and VanEck Africa.
Diversification Opportunities for VanEck Indonesia and VanEck Africa
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between VanEck and VanEck is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Indonesia Index and VanEck Africa Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Africa Index and VanEck Indonesia 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 Indonesia Index are associated (or correlated) with VanEck Africa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Africa Index has no effect on the direction of VanEck Indonesia i.e., VanEck Indonesia and VanEck Africa go up and down completely randomly.
Pair Corralation between VanEck Indonesia and VanEck Africa
Considering the 90-day investment horizon VanEck Indonesia Index is expected to under-perform the VanEck Africa. But the etf apears to be less risky and, when comparing its historical volatility, VanEck Indonesia Index is 1.43 times less risky than VanEck Africa. The etf trades about -0.26 of its potential returns per unit of risk. The VanEck Africa Index is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest 1,671 in VanEck Africa Index on August 31, 2024 and sell it today you would lose (66.00) from holding VanEck Africa Index or give up 3.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
VanEck Indonesia Index vs. VanEck Africa Index
Performance |
| Timeline |
| VanEck Indonesia Index |
| VanEck Africa Index |
VanEck Indonesia and VanEck Africa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VanEck Indonesia and VanEck Africa
The main advantage of trading using opposite VanEck Indonesia and VanEck Africa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Indonesia position performs unexpectedly, VanEck Africa 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 Africa will offset losses from the drop in VanEck Africa's long position.| VanEck Indonesia vs. iShares MSCI Thailand | VanEck Indonesia vs. iShares MSCI Chile | VanEck Indonesia vs. iShares MSCI Turkey | VanEck Indonesia vs. Global X MSCI |
| VanEck Africa vs. iShares MSCI South | VanEck Africa vs. VanEck Indonesia Index | VanEck Africa vs. iShares MSCI Thailand |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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