Correlation Between VanEck Morningstar and IShares MSCI

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

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

Diversification Opportunities for VanEck Morningstar and IShares MSCI

0.3

Correlation Coefficient

VanEck Morningstar  IShares MSCI

Weak diversification

The 3 months correlation between VanEck and IShares is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Morningstar Wide and iShares MSCI USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI USA and VanEck Morningstar 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 Morningstar Wide are associated (or correlated) with IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI USA has no effect on the direction of VanEck Morningstar i.e., VanEck Morningstar and IShares MSCI go up and down completely randomly.

Pair Corralation between VanEck Morningstar and IShares MSCI

Given the investment horizon of 90 days VanEck Morningstar Wide is expected to under-perform the IShares MSCI. But the etf apears to be less risky and, when comparing its historical volatility, VanEck Morningstar Wide is 1.08 times less risky than IShares MSCI. The etf trades about -0.07 of its potential returns per unit of risk. The iShares MSCI USA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  10,463  in iShares MSCI USA on December 29, 2024 and sell it today you would earn a total of  120.00  from holding iShares MSCI USA or generate 1.15% return on investment over 90 days.

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

VanEck Morningstar Wide  vs.  iShares MSCI USA

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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

iShares MSCI USA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI USA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, IShares MSCI is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with VanEck Morningstar and IShares MSCI

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

The idea behind VanEck Morningstar Wide and iShares MSCI USA 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.

Check out your portfolio center.

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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.