Correlation Between VanEck Indonesia and VanEck Brazil
Can any of the company-specific risk be diversified away by investing in both VanEck Indonesia 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 VanEck Indonesia and VanEck Brazil 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 Brazil Small Cap, you can compare the effects of market volatilities on VanEck Indonesia 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 VanEck Indonesia with a short position of VanEck Brazil. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Indonesia and VanEck Brazil.
Diversification Opportunities for VanEck Indonesia and VanEck Brazil
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between VanEck and VanEck is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Indonesia Index 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 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 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 VanEck Indonesia i.e., VanEck Indonesia and VanEck Brazil go up and down completely randomly.
Pair Corralation between VanEck Indonesia and VanEck Brazil
Considering the 90-day investment horizon VanEck Indonesia Index is expected to generate 0.7 times more return on investment than VanEck Brazil. However, VanEck Indonesia Index is 1.43 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 -0.06 per unit of risk. If you would invest 1,680 in VanEck Indonesia Index on September 2, 2024 and sell it today you would lose (82.00) from holding VanEck Indonesia Index or give up 4.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
VanEck Indonesia Index vs. VanEck Brazil Small Cap
Performance |
| Timeline |
| VanEck Indonesia Index |
| VanEck Brazil Small |
VanEck Indonesia and VanEck Brazil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VanEck Indonesia and VanEck Brazil
The main advantage of trading using opposite VanEck Indonesia and VanEck Brazil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Indonesia 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.| 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 Brazil vs. VanEck Indonesia Index | VanEck Brazil vs. iShares MSCI Chile | VanEck Brazil vs. iShares MSCI Brazil | VanEck Brazil vs. iShares MSCI Peru |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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