Correlation Between VanEck Israel and SPDR FactSet

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

By analyzing existing cross correlation between VanEck Israel ETF and SPDR FactSet Innovative, you can compare the effects of market volatilities on VanEck Israel and SPDR FactSet 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 Israel with a short position of SPDR FactSet. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Israel and SPDR FactSet.

Diversification Opportunities for VanEck Israel and SPDR FactSet

0.76

Correlation Coefficient

VanEck Israel  SPDR FactSet

Poor diversification

The 3 months correlation between VanEck and SPDR is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Israel ETF and SPDR FactSet Innovative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR FactSet Innovative and VanEck Israel 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 Israel ETF are associated (or correlated) with SPDR FactSet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR FactSet Innovative has no effect on the direction of VanEck Israel i.e., VanEck Israel and SPDR FactSet go up and down completely randomly.

Pair Corralation between VanEck Israel and SPDR FactSet

Given the investment horizon of 90 days VanEck Israel ETF is expected to generate 0.72 times more return on investment than SPDR FactSet. However, VanEck Israel ETF is 1.39 times less risky than SPDR FactSet. It trades about -0.01 of its potential returns per unit of risk. SPDR FactSet Innovative is currently generating about -0.08 per unit of risk. If you would invest  4,501  in VanEck Israel ETF on November 28, 2024 and sell it today you would lose (11.00) from holding VanEck Israel ETF or give up 0.24% of portfolio value over 90 days.

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

VanEck Israel ETF  vs.  SPDR FactSet Innovative

VanEck Israel ETF

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Israel ETF are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, VanEck Israel may actually be approaching a critical reversion point that can send shares even higher in March 2025.

SPDR FactSet Innovative

Risk-Adjusted Performance

Very Weak

Over the last 90 days SPDR FactSet Innovative has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, SPDR FactSet is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with VanEck Israel and SPDR FactSet

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

The idea behind VanEck Israel ETF and SPDR FactSet Innovative 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.