Correlation Between VanEck Morningstar and VanEck Israel

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

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

Diversification Opportunities for VanEck Morningstar and VanEck Israel

-0.35

Correlation Coefficient

VanEck Morningstar  VanEck Israel

Very good diversification

The 3 months correlation between VanEck and VanEck is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Morningstar Internation and VanEck Israel ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Israel ETF 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 International are associated (or correlated) with VanEck Israel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Israel ETF has no effect on the direction of VanEck Morningstar i.e., VanEck Morningstar and VanEck Israel go up and down completely randomly.

Pair Corralation between VanEck Morningstar and VanEck Israel

Given the investment horizon of 90 days VanEck Morningstar is expected to generate 11.47 times less return on investment than VanEck Israel. In addition to that, VanEck Morningstar is 1.37 times more volatile than VanEck Israel ETF. It trades about 0.01 of its total potential returns per unit of risk. VanEck Israel ETF is currently generating about 0.2 per unit of volatility. If you would invest  3,791  in VanEck Israel ETF on September 2, 2024 and sell it today you would earn a total of  500.00  from holding VanEck Israel ETF or generate 13.19% return on investment over 90 days.

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

VanEck Morningstar Internation  vs.  VanEck Israel ETF

VanEck Morningstar

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Morningstar International are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, VanEck Morningstar is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

VanEck Israel ETF

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Israel ETF are ranked lower than 16 (%) 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 January 2025.

Pair Trading with VanEck Morningstar and VanEck Israel

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

The idea behind VanEck Morningstar International and VanEck Israel ETF 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.