Correlation Between IShares SP and VanEck Oil
Can any of the company-specific risk be diversified away by investing in both IShares SP and VanEck Oil 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 SP and VanEck Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares SP 500 and VanEck Oil Services, you can compare the effects of market volatilities on IShares SP and VanEck Oil 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 SP with a short position of VanEck Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares SP and VanEck Oil.
Diversification Opportunities for IShares SP and VanEck Oil
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and VanEck is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding iShares SP 500 and VanEck Oil Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Oil Services and IShares SP 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 SP 500 are associated (or correlated) with VanEck Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Oil Services has no effect on the direction of IShares SP i.e., IShares SP and VanEck Oil go up and down completely randomly.
Pair Corralation between IShares SP and VanEck Oil
Assuming the 90 days trading horizon IShares SP is expected to generate 6.69 times less return on investment than VanEck Oil. But when comparing it to its historical volatility, iShares SP 500 is 1.51 times less risky than VanEck Oil. It trades about 0.13 of its potential returns per unit of risk. VanEck Oil Services is currently generating about 0.56 of returns per unit of risk over similar time horizon. If you would invest 1,856 in VanEck Oil Services on October 20, 2024 and sell it today you would earn a total of 268.00 from holding VanEck Oil Services or generate 14.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares SP 500 vs. VanEck Oil Services
Performance |
| Timeline |
| iShares SP 500 |
| VanEck Oil Services |
IShares SP and VanEck Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares SP and VanEck Oil
The main advantage of trading using opposite IShares SP and VanEck Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares SP position performs unexpectedly, VanEck Oil 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 Oil will offset losses from the drop in VanEck Oil's long position.| IShares SP vs. iShares Corp Bond | IShares SP vs. iShares Emerging Asia | IShares SP vs. iShares MSCI Global | IShares SP vs. iShares VII PLC |
| VanEck Oil vs. UBSFund Solutions MSCI | VanEck Oil vs. Vanguard SP 500 | VanEck Oil vs. iShares VII PLC | VanEck Oil vs. iShares Core SP |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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