Correlation Between Betashares Asia and VanEck MSCI

Can any of the company-specific risk be diversified away by investing in both Betashares Asia 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 Betashares Asia and VanEck MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Betashares Asia Technology and VanEck MSCI International, you can compare the effects of market volatilities on Betashares Asia 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 Betashares Asia with a short position of VanEck MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Betashares Asia and VanEck MSCI.

Diversification Opportunities for Betashares Asia and VanEck MSCI

0.49

Correlation Coefficient

Betashares Asia  VanEck MSCI

Very weak diversification

The 3 months correlation between Betashares and VanEck is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Betashares Asia Technology 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 Betashares Asia 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 Betashares Asia Technology 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 Betashares Asia i.e., Betashares Asia and VanEck MSCI go up and down completely randomly.

Pair Corralation between Betashares Asia and VanEck MSCI

Assuming the 90 days trading horizon Betashares Asia Technology is expected to generate 1.48 times more return on investment than VanEck MSCI. However, Betashares Asia is 1.48 times more volatile than VanEck MSCI International. It trades about 0.16 of its potential returns per unit of risk. VanEck MSCI International is currently generating about 0.22 per unit of risk. If you would invest  869.00  in Betashares Asia Technology on September 13, 2024 and sell it today you would earn a total of  134.00  from holding Betashares Asia Technology or generate 15.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Betashares Asia Technology  vs.  VanEck MSCI International

Betashares Asia Tech

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Betashares Asia Technology are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Betashares Asia unveiled solid returns over the last few months and may actually be approaching a breakup point.

VanEck MSCI International

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck MSCI International are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, VanEck MSCI unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Betashares Asia and VanEck MSCI

The main advantage of trading using opposite Betashares Asia and VanEck MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Betashares Asia 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.

The idea behind Betashares Asia Technology and VanEck MSCI International pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.