Correlation Between VanEck Brazil and Global X

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

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

Diversification Opportunities for VanEck Brazil and Global X

-0.41

Correlation Coefficient

VanEck Brazil  Global X

Very good diversification

The 3 months correlation between VanEck and Global is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Brazil Small Cap and Global X MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X MSCI and VanEck Brazil 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 Brazil Small Cap are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X MSCI has no effect on the direction of VanEck Brazil i.e., VanEck Brazil and Global X go up and down completely randomly.

Pair Corralation between VanEck Brazil and Global X

Considering the 90-day investment horizon VanEck Brazil is expected to generate 4.89 times less return on investment than Global X. In addition to that, VanEck Brazil is 1.34 times more volatile than Global X MSCI. It trades about 0.01 of its total potential returns per unit of risk. Global X MSCI is currently generating about 0.05 per unit of volatility. If you would invest  1,812  in Global X MSCI on September 17, 2024 and sell it today you would earn a total of  606.00  from holding Global X MSCI or generate 33.44% return on investment over 90 days.

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

VanEck Brazil Small Cap  vs.  Global X MSCI

VanEck Brazil Small

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VanEck Brazil Small Cap has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Etf's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the Exchange Traded Fund stockholders.

Global X MSCI

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Global X MSCI are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Global X is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with VanEck Brazil and Global X

The main advantage of trading using opposite VanEck Brazil and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Brazil position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X's long position.

The idea behind VanEck Brazil Small Cap and Global X MSCI 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.

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 Stocks Directory module to find actively traded stocks across global markets.