Correlation Between VanEck MSCI and VanEck Morningstar
Can any of the company-specific risk be diversified away by investing in both VanEck MSCI and VanEck Morningstar 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 MSCI and VanEck Morningstar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VanEck MSCI International and VanEck Morningstar Wide, you can compare the effects of market volatilities on VanEck MSCI and VanEck Morningstar 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 MSCI with a short position of VanEck Morningstar. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck MSCI and VanEck Morningstar.
Diversification Opportunities for VanEck MSCI and VanEck Morningstar
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between VanEck and VanEck is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding VanEck MSCI International and VanEck Morningstar Wide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Morningstar Wide and VanEck MSCI 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 MSCI International are associated (or correlated) with VanEck Morningstar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Morningstar Wide has no effect on the direction of VanEck MSCI i.e., VanEck MSCI and VanEck Morningstar go up and down completely randomly.
Pair Corralation between VanEck MSCI and VanEck Morningstar
Assuming the 90 days trading horizon VanEck MSCI International is expected to generate 1.26 times more return on investment than VanEck Morningstar. However, VanEck MSCI is 1.26 times more volatile than VanEck Morningstar Wide. It trades about 0.28 of its potential returns per unit of risk. VanEck Morningstar Wide is currently generating about 0.19 per unit of risk. If you would invest 2,961 in VanEck MSCI International on August 29, 2024 and sell it today you would earn a total of 251.00 from holding VanEck MSCI International or generate 8.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
VanEck MSCI International vs. VanEck Morningstar Wide
Performance |
| Timeline |
| VanEck MSCI International |
| VanEck Morningstar Wide |
VanEck MSCI and VanEck Morningstar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VanEck MSCI and VanEck Morningstar
The main advantage of trading using opposite VanEck MSCI and VanEck Morningstar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck MSCI position performs unexpectedly, VanEck Morningstar 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 Morningstar will offset losses from the drop in VanEck Morningstar's long position.| VanEck MSCI vs. BetaShares Geared Australian | VanEck MSCI vs. BetaShares Global Robotics | VanEck MSCI vs. iShares China LargeCap | VanEck MSCI vs. Russell Australian Government |
| VanEck Morningstar vs. VanEck Vectors Australian | VanEck Morningstar vs. VanEck FTSE China | VanEck Morningstar vs. VanEck MSCI International | VanEck Morningstar vs. VanEck Global Clean |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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