Correlation Between Vanguard MSCI and VanEck Vectors
Can any of the company-specific risk be diversified away by investing in both Vanguard MSCI 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 Vanguard MSCI and VanEck Vectors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard MSCI International and VanEck Vectors MSCI, you can compare the effects of market volatilities on Vanguard MSCI 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 Vanguard MSCI with a short position of VanEck Vectors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard MSCI and VanEck Vectors.
Diversification Opportunities for Vanguard MSCI and VanEck Vectors
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and VanEck is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard MSCI International and VanEck Vectors MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Vectors MSCI and Vanguard 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 Vanguard MSCI International 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 MSCI has no effect on the direction of Vanguard MSCI i.e., Vanguard MSCI and VanEck Vectors go up and down completely randomly.
Pair Corralation between Vanguard MSCI and VanEck Vectors
Assuming the 90 days trading horizon Vanguard MSCI International is expected to generate 0.52 times more return on investment than VanEck Vectors. However, Vanguard MSCI International is 1.92 times less risky than VanEck Vectors. It trades about 0.17 of its potential returns per unit of risk. VanEck Vectors MSCI is currently generating about 0.03 per unit of risk. If you would invest 13,190 in Vanguard MSCI International on August 29, 2024 and sell it today you would earn a total of 406.00 from holding Vanguard MSCI International or generate 3.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard MSCI International vs. VanEck Vectors MSCI
Performance |
| Timeline |
| Vanguard MSCI Intern |
| VanEck Vectors MSCI |
Vanguard MSCI and VanEck Vectors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard MSCI and VanEck Vectors
The main advantage of trading using opposite Vanguard MSCI and VanEck Vectors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard MSCI 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.| Vanguard MSCI vs. Vanguard Global Minimum | Vanguard MSCI vs. Vanguard Global Aggregate | Vanguard MSCI vs. Vanguard Australian Fixed | Vanguard MSCI vs. Vanguard Global Infrastructure |
| VanEck Vectors vs. VanEck Vectors Australian | VanEck Vectors vs. VanEck FTSE China | VanEck Vectors vs. VanEck MSCI International | VanEck Vectors 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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