Correlation Between IShares Core and VanEck Multi

Can any of the company-specific risk be diversified away by investing in both IShares Core and VanEck Multi 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 Multi 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 Multi Asset Growth, you can compare the effects of market volatilities on IShares Core and VanEck Multi 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 Multi. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and VanEck Multi.

Diversification Opportunities for IShares Core and VanEck Multi

0.92

Correlation Coefficient

IShares Core  VanEck Multi

Almost no diversification

The 3 months correlation between IShares and VanEck is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core MSCI and VanEck Multi Asset Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Multi Asset 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 Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Multi Asset has no effect on the direction of IShares Core i.e., IShares Core and VanEck Multi go up and down completely randomly.

Pair Corralation between IShares Core and VanEck Multi

Assuming the 90 days trading horizon iShares Core MSCI is expected to generate 1.09 times more return on investment than VanEck Multi. However, IShares Core is 1.09 times more volatile than VanEck Multi Asset Growth. It trades about 0.29 of its potential returns per unit of risk. VanEck Multi Asset Growth is currently generating about 0.07 per unit of risk. If you would invest  3,181  in iShares Core MSCI on December 5, 2024 and sell it today you would earn a total of  258.00  from holding iShares Core MSCI or generate 8.11% return on investment over 90 days.

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

iShares Core MSCI  vs.  VanEck Multi Asset Growth

iShares Core MSCI

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core MSCI are ranked lower than 13 (%) 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 April 2025.

VanEck Multi Asset

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Multi Asset Growth are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, VanEck Multi 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 Multi

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

The idea behind iShares Core MSCI and VanEck Multi Asset Growth 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.