Correlation Between IShares Core and VanEck AEX

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

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

Diversification Opportunities for IShares Core and VanEck AEX

0.25

Correlation Coefficient

IShares Core  VanEck AEX

Modest diversification

The 3 months correlation between IShares and VanEck is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core MSCI and VanEck AEX UCITS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck AEX UCITS and IShares Core 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 Core MSCI are associated (or correlated) with VanEck AEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck AEX UCITS has no effect on the direction of IShares Core i.e., IShares Core and VanEck AEX go up and down completely randomly.

Pair Corralation between IShares Core and VanEck AEX

Assuming the 90 days trading horizon iShares Core MSCI is expected to generate 1.15 times more return on investment than VanEck AEX. However, IShares Core is 1.15 times more volatile than VanEck AEX UCITS. It trades about 0.14 of its potential returns per unit of risk. VanEck AEX UCITS is currently generating about 0.01 per unit of risk. If you would invest  3,110  in iShares Core MSCI on September 14, 2024 and sell it today you would earn a total of  248.00  from holding iShares Core MSCI or generate 7.97% return on investment over 90 days.

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

iShares Core MSCI  vs.  VanEck AEX UCITS

iShares Core MSCI

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core MSCI are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, IShares Core may actually be approaching a critical reversion point that can send shares even higher in January 2025.

VanEck AEX UCITS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VanEck AEX UCITS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, VanEck AEX is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with IShares Core and VanEck AEX

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

The idea behind iShares Core MSCI and VanEck AEX UCITS 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.