Correlation Between VanEck Emerging and VanEck International

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

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

Diversification Opportunities for VanEck Emerging and VanEck International

-0.22

Correlation Coefficient

VanEck Emerging  VanEck International

Very good diversification

The 3 months correlation between VanEck and VanEck is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Emerging Markets and VanEck International High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck International High and VanEck Emerging 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 Emerging Markets are associated (or correlated) with VanEck International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck International High has no effect on the direction of VanEck Emerging i.e., VanEck Emerging and VanEck International go up and down completely randomly.

Pair Corralation between VanEck Emerging and VanEck International

Given the investment horizon of 90 days VanEck Emerging Markets is expected to generate 0.91 times more return on investment than VanEck International. However, VanEck Emerging Markets is 1.1 times less risky than VanEck International. It trades about 0.11 of its potential returns per unit of risk. VanEck International High is currently generating about 0.08 per unit of risk. If you would invest  1,609  in VanEck Emerging Markets on September 15, 2024 and sell it today you would earn a total of  356.00  from holding VanEck Emerging Markets or generate 22.13% return on investment over 90 days.

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

VanEck Emerging Markets  vs.  VanEck International High

VanEck Emerging Markets

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Emerging Markets are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, VanEck Emerging is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

VanEck International High

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VanEck International High has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical indicators, VanEck International is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with VanEck Emerging and VanEck International

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

The idea behind VanEck Emerging Markets and VanEck International High 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.