Correlation Between IShares Global and VanEck Natural
Can any of the company-specific risk be diversified away by investing in both IShares Global and VanEck Natural 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 Global and VanEck Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Global Timber and VanEck Natural Resources, you can compare the effects of market volatilities on IShares Global and VanEck Natural 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 Global with a short position of VanEck Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Global and VanEck Natural.
Diversification Opportunities for IShares Global and VanEck Natural
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and VanEck is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding iShares Global Timber and VanEck Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Natural Resources and IShares Global 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 Global Timber are associated (or correlated) with VanEck Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Natural Resources has no effect on the direction of IShares Global i.e., IShares Global and VanEck Natural go up and down completely randomly.
Pair Corralation between IShares Global and VanEck Natural
Given the investment horizon of 90 days iShares Global Timber is expected to generate 1.3 times more return on investment than VanEck Natural. However, IShares Global is 1.3 times more volatile than VanEck Natural Resources. It trades about 0.03 of its potential returns per unit of risk. VanEck Natural Resources is currently generating about 0.0 per unit of risk. If you would invest 8,090 in iShares Global Timber on September 3, 2024 and sell it today you would earn a total of 49.00 from holding iShares Global Timber or generate 0.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Global Timber vs. VanEck Natural Resources
Performance |
| Timeline |
| iShares Global Timber |
| VanEck Natural Resources |
IShares Global and VanEck Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Global and VanEck Natural
The main advantage of trading using opposite IShares Global and VanEck Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Global position performs unexpectedly, VanEck Natural 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 Natural will offset losses from the drop in VanEck Natural's long position.| IShares Global vs. Direxion Daily Gold | IShares Global vs. SPDR SP North | IShares Global vs. Xtrackers RREEF Global | IShares Global vs. Direxion Daily Gold |
| VanEck Natural vs. Invesco MSCI Global | VanEck Natural vs. WisdomTree Continuous Commodity | VanEck Natural vs. VanEck UraniumNuclear Energy | VanEck Natural vs. SPDR SP Global |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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