Correlation Between IShares China and VanEck Vectors
Can any of the company-specific risk be diversified away by investing in both IShares China 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 China 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 China LargeCap and VanEck Vectors Small, you can compare the effects of market volatilities on IShares China 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 China with a short position of VanEck Vectors. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares China and VanEck Vectors.
Diversification Opportunities for IShares China and VanEck Vectors
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and VanEck is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding iShares China LargeCap 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 China 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 China LargeCap 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 China i.e., IShares China and VanEck Vectors go up and down completely randomly.
Pair Corralation between IShares China and VanEck Vectors
Assuming the 90 days trading horizon iShares China LargeCap is expected to under-perform the VanEck Vectors. In addition to that, IShares China is 1.57 times more volatile than VanEck Vectors Small. It trades about -0.22 of its total potential returns per unit of risk. VanEck Vectors Small is currently generating about -0.18 per unit of volatility. If you would invest 2,045 in VanEck Vectors Small on August 29, 2024 and sell it today you would lose (58.00) from holding VanEck Vectors Small or give up 2.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares China LargeCap vs. VanEck Vectors Small
Performance |
| Timeline |
| iShares China LargeCap |
| VanEck Vectors Small |
IShares China and VanEck Vectors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares China and VanEck Vectors
The main advantage of trading using opposite IShares China and VanEck Vectors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares China 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 China vs. iShares MSCI Emerging | IShares China vs. iShares Global Aggregate | IShares China vs. iShares CoreSP MidCap | IShares China vs. iShares SP 500 |
| VanEck Vectors vs. SPDR SP 500 | VanEck Vectors vs. Vanguard Total Market | VanEck Vectors vs. iShares Core SP | 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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