Correlation Between IShares Asia and VanEck Global

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

By analyzing existing cross correlation between iShares Asia 50 and VanEck Global Listed, you can compare the effects of market volatilities on IShares Asia and VanEck Global 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 Asia with a short position of VanEck Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Asia and VanEck Global.

Diversification Opportunities for IShares Asia and VanEck Global

0.34

Correlation Coefficient

IShares Asia  VanEck Global

Weak diversification

The 3 months correlation between IShares and VanEck is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding iShares Asia 50 and VanEck Global Listed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Global Listed and IShares 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 iShares Asia 50 are associated (or correlated) with VanEck Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Global Listed has no effect on the direction of IShares Asia i.e., IShares Asia and VanEck Global go up and down completely randomly.

Pair Corralation between IShares Asia and VanEck Global

Assuming the 90 days trading horizon IShares Asia is expected to generate 1.56 times less return on investment than VanEck Global. In addition to that, IShares Asia is 1.21 times more volatile than VanEck Global Listed. It trades about 0.17 of its total potential returns per unit of risk. VanEck Global Listed is currently generating about 0.32 per unit of volatility. If you would invest  2,165  in VanEck Global Listed on September 13, 2024 and sell it today you would earn a total of  432.00  from holding VanEck Global Listed or generate 19.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

iShares Asia 50  vs.  VanEck Global Listed

iShares Asia 50

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Asia 50 are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, IShares Asia may actually be approaching a critical reversion point that can send shares even higher in January 2025.

VanEck Global Listed

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Global Listed are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, VanEck Global unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares Asia and VanEck Global

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

The idea behind iShares Asia 50 and VanEck Global Listed 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.