Correlation Between IShares Core and VanEck Vectors
Can any of the company-specific risk be diversified away by investing in both IShares Core and VanEck Vectors 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 Core and VanEck Vectors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Core SP and VanEck Vectors Small, you can compare the effects of market volatilities on IShares Core and VanEck Vectors 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 Core with a short position of VanEck Vectors. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and VanEck Vectors.
Diversification Opportunities for IShares Core and VanEck Vectors
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between IShares and VanEck is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and VanEck Vectors Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Vectors Small and IShares Core 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 Core SP are associated (or correlated) with VanEck Vectors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Vectors Small has no effect on the direction of IShares Core i.e., IShares Core and VanEck Vectors go up and down completely randomly.
Pair Corralation between IShares Core and VanEck Vectors
Assuming the 90 days trading horizon iShares Core SP is expected to generate 0.8 times more return on investment than VanEck Vectors. However, iShares Core SP is 1.26 times less risky than VanEck Vectors. It trades about 0.13 of its potential returns per unit of risk. VanEck Vectors Small is currently generating about 0.03 per unit of risk. If you would invest 3,865 in iShares Core SP on August 26, 2024 and sell it today you would earn a total of 2,236 from holding iShares Core SP or generate 57.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Core SP vs. VanEck Vectors Small
Performance |
| Timeline |
| iShares Core SP |
| VanEck Vectors Small |
IShares Core and VanEck Vectors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and VanEck Vectors
The main advantage of trading using opposite IShares Core and VanEck Vectors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, VanEck Vectors 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 Vectors will offset losses from the drop in VanEck Vectors' long position.| IShares Core vs. iShares MSCI Emerging | IShares Core vs. iShares Global Aggregate | IShares Core vs. iShares CoreSP MidCap | IShares Core vs. iShares SP 500 |
| VanEck Vectors vs. iShares Core SP | VanEck Vectors vs. iShares CoreSP MidCap | VanEck Vectors vs. SPDR SP 500 | VanEck Vectors 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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