Correlation Between VanEck International and IShares Intl

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

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

Diversification Opportunities for VanEck International and IShares Intl

0.97

Correlation Coefficient

VanEck International  IShares Intl

Almost no diversification

The 3 months correlation between VanEck and IShares is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding VanEck International High and iShares Intl High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Intl High and VanEck International 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 International High are associated (or correlated) with IShares Intl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Intl High has no effect on the direction of VanEck International i.e., VanEck International and IShares Intl go up and down completely randomly.

Pair Corralation between VanEck International and IShares Intl

Considering the 90-day investment horizon VanEck International High is expected to generate 1.37 times more return on investment than IShares Intl. However, VanEck International is 1.37 times more volatile than iShares Intl High. It trades about 0.12 of its potential returns per unit of risk. iShares Intl High is currently generating about 0.11 per unit of risk. If you would invest  2,039  in VanEck International High on December 28, 2024 and sell it today you would earn a total of  64.00  from holding VanEck International High or generate 3.14% return on investment over 90 days.

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

VanEck International High  vs.  iShares Intl High

VanEck International High

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck International High are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. 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.

iShares Intl High

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Intl High are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, IShares Intl 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 International and IShares Intl

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

The idea behind VanEck International High and iShares Intl 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.