Correlation Between IShares MSCI and Van Eck

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

By analyzing existing cross correlation between iShares MSCI Israel and Van Eck, you can compare the effects of market volatilities on IShares MSCI and Van Eck 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 MSCI with a short position of Van Eck. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and Van Eck.

Diversification Opportunities for IShares MSCI and Van Eck

-0.12

Correlation Coefficient

IShares MSCI  Van Eck

Good diversification

The 3 months correlation between IShares and Van is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI Israel and Van Eck in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Van Eck and IShares 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 iShares MSCI Israel are associated (or correlated) with Van Eck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Van Eck has no effect on the direction of IShares MSCI i.e., IShares MSCI and Van Eck go up and down completely randomly.

Pair Corralation between IShares MSCI and Van Eck

Considering the 90-day investment horizon iShares MSCI Israel is expected to generate 11.86 times more return on investment than Van Eck. However, IShares MSCI is 11.86 times more volatile than Van Eck. It trades about 0.06 of its potential returns per unit of risk. Van Eck is currently generating about 0.0 per unit of risk. If you would invest  5,432  in iShares MSCI Israel on September 14, 2024 and sell it today you would earn a total of  2,180  from holding iShares MSCI Israel or generate 40.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	10.51%
Values	Daily Returns

iShares MSCI Israel  vs.  Van Eck

iShares MSCI Israel

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI Israel are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady forward indicators, IShares MSCI unveiled solid returns over the last few months and may actually be approaching a breakup point.

Van Eck

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Van Eck has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady basic indicators, Van Eck is not utilizing all of its potentials. The newest stock price chaos, may contribute to medium-term losses for the stakeholders.

Pair Trading with IShares MSCI and Van Eck

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

The idea behind iShares MSCI Israel and Van Eck 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.