Correlation Between IShares MSCI and VanEck CMCI

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

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

Diversification Opportunities for IShares MSCI and VanEck CMCI

0.41

Correlation Coefficient

IShares MSCI  VanEck CMCI

Very weak diversification

The 3 months correlation between IShares and VanEck is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI China and VanEck CMCI Commodity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck CMCI Commodity 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 China are associated (or correlated) with VanEck CMCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck CMCI Commodity has no effect on the direction of IShares MSCI i.e., IShares MSCI and VanEck CMCI go up and down completely randomly.

Pair Corralation between IShares MSCI and VanEck CMCI

Given the investment horizon of 90 days IShares MSCI is expected to generate 52.81 times less return on investment than VanEck CMCI. But when comparing it to its historical volatility, iShares MSCI China is 74.25 times less risky than VanEck CMCI. It trades about 0.18 of its potential returns per unit of risk. VanEck CMCI Commodity is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  2,411  in VanEck CMCI Commodity on December 21, 2024 and sell it today you would earn a total of  154,559  from holding VanEck CMCI Commodity or generate 6410.58% return on investment over 90 days.

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

iShares MSCI China  vs.  VanEck CMCI Commodity

iShares MSCI China

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI China are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, IShares MSCI demonstrated solid returns over the last few months and may actually be approaching a breakup point.

VanEck CMCI Commodity

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck CMCI Commodity are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain fundamental indicators, VanEck CMCI demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares MSCI and VanEck CMCI

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

The idea behind iShares MSCI China and VanEck CMCI Commodity 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.