Correlation Between IShares Core and VanEck Morningstar

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

By analyzing existing cross correlation between iShares Core SP and VanEck Morningstar Wide, you can compare the effects of market volatilities on IShares Core and VanEck Morningstar 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 Morningstar. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and VanEck Morningstar.

Diversification Opportunities for IShares Core and VanEck Morningstar

0.79

Correlation Coefficient

IShares Core  VanEck Morningstar

Poor diversification

The 3 months correlation between IShares and VanEck is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and VanEck Morningstar Wide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Morningstar Wide 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 SP are associated (or correlated) with VanEck Morningstar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Morningstar Wide has no effect on the direction of IShares Core i.e., IShares Core and VanEck Morningstar go up and down completely randomly.

Pair Corralation between IShares Core and VanEck Morningstar

Assuming the 90 days trading horizon iShares Core SP is expected to generate 0.98 times more return on investment than VanEck Morningstar. However, iShares Core SP is 1.02 times less risky than VanEck Morningstar. It trades about -0.12 of its potential returns per unit of risk. VanEck Morningstar Wide is currently generating about -0.12 per unit of risk. If you would invest  6,361  in iShares Core SP on December 30, 2024 and sell it today you would lose (331.00) from holding iShares Core SP or give up 5.2% of portfolio value over 90 days.

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

iShares Core SP  vs.  VanEck Morningstar Wide

iShares Core SP

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Core SP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, IShares Core is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

VanEck Morningstar Wide

Risk-Adjusted Performance

Very Weak

Over the last 90 days VanEck Morningstar Wide has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, VanEck Morningstar 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 Morningstar

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

The idea behind iShares Core SP and VanEck Morningstar Wide 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.