Correlation Between IShares MSCI and VanEck Multi

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

Diversification Opportunities for IShares MSCI and VanEck Multi

0.72

Correlation Coefficient

IShares MSCI  VanEck Multi

Poor diversification

The 3 months correlation between IShares and VanEck is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI World 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 MSCI 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 MSCI World 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 MSCI i.e., IShares MSCI and VanEck Multi go up and down completely randomly.

Pair Corralation between IShares MSCI and VanEck Multi

Assuming the 90 days trading horizon iShares MSCI World is expected to under-perform the VanEck Multi. In addition to that, IShares MSCI is 1.65 times more volatile than VanEck Multi Asset Growth. It trades about -0.09 of its total potential returns per unit of risk. VanEck Multi Asset Growth is currently generating about 0.0 per unit of volatility. If you would invest  8,168  in VanEck Multi Asset Growth on December 30, 2024 and sell it today you would lose (4.00) from holding VanEck Multi Asset Growth or give up 0.05% of portfolio value over 90 days.

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

iShares MSCI World  vs.  VanEck Multi Asset Growth

iShares MSCI World

Risk-Adjusted Performance

Very Weak

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

VanEck Multi Asset

Risk-Adjusted Performance

Very Weak

Over the last 90 days VanEck Multi Asset Growth has generated negative risk-adjusted returns adding no value to investors with long positions. 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 MSCI and VanEck Multi

The main advantage of trading using opposite IShares MSCI and VanEck Multi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI 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 MSCI World 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.