Correlation Between IShares China and VanEck MSCI
Can any of the company-specific risk be diversified away by investing in both IShares China and VanEck MSCI 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 MSCI 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 MSCI International, you can compare the effects of market volatilities on IShares China and VanEck MSCI 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 MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares China and VanEck MSCI.
Diversification Opportunities for IShares China and VanEck MSCI
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and VanEck is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding iShares China LargeCap and VanEck MSCI International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck MSCI International 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 MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck MSCI International has no effect on the direction of IShares China i.e., IShares China and VanEck MSCI go up and down completely randomly.
Pair Corralation between IShares China and VanEck MSCI
Assuming the 90 days trading horizon iShares China LargeCap is expected to under-perform the VanEck MSCI. But the etf apears to be less risky and, when comparing its historical volatility, iShares China LargeCap is 1.25 times less risky than VanEck MSCI. The etf trades about -0.16 of its potential returns per unit of risk. The VanEck MSCI International is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 2,993 in VanEck MSCI International on September 1, 2024 and sell it today you would earn a total of 203.00 from holding VanEck MSCI International or generate 6.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares China LargeCap vs. VanEck MSCI International
Performance |
| Timeline |
| iShares China LargeCap |
| VanEck MSCI International |
IShares China and VanEck MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares China and VanEck MSCI
The main advantage of trading using opposite IShares China and VanEck MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares China position performs unexpectedly, VanEck MSCI 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 MSCI will offset losses from the drop in VanEck MSCI's long position.| IShares China vs. ETFS Morningstar Global | IShares China vs. BetaShares Geared Equity | IShares China vs. VanEck Vectors Australian | IShares China vs. SPDR SPASX 200 |
| VanEck MSCI vs. Champion Iron | VanEck MSCI vs. Australian Dairy Farms | VanEck MSCI vs. Perpetual Credit Income | VanEck MSCI vs. Greentech Metals |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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