Correlation Between VanEck Morningstar and VanEck Vectors

Can any of the company-specific risk be diversified away by investing in both VanEck Morningstar and VanEck Vectors 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 Vectors 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 Vectors ETF, you can compare the effects of market volatilities on VanEck Morningstar and VanEck Vectors 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 Vectors. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Morningstar and VanEck Vectors.

Diversification Opportunities for VanEck Morningstar and VanEck Vectors

0.98

Correlation Coefficient

VanEck Morningstar  VanEck Vectors

Almost no diversification

The 3 months correlation between VanEck and VanEck is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Morningstar Internation and VanEck Vectors ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Vectors 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 Vectors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Vectors ETF has no effect on the direction of VanEck Morningstar i.e., VanEck Morningstar and VanEck Vectors go up and down completely randomly.

Pair Corralation between VanEck Morningstar and VanEck Vectors

Given the investment horizon of 90 days VanEck Morningstar International is expected to generate 1.22 times more return on investment than VanEck Vectors. However, VanEck Morningstar is 1.22 times more volatile than VanEck Vectors ETF. It trades about 0.26 of its potential returns per unit of risk. VanEck Vectors ETF is currently generating about 0.22 per unit of risk. If you would invest  3,028  in VanEck Morningstar International on December 19, 2024 and sell it today you would earn a total of  509.00  from holding VanEck Morningstar International or generate 16.81% return on investment over 90 days.

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

VanEck Morningstar Internation  vs.  VanEck Vectors ETF

VanEck Morningstar

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Morningstar International are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, VanEck Morningstar demonstrated solid returns over the last few months and may actually be approaching a breakup point.

VanEck Vectors ETF

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Vectors ETF are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, VanEck Vectors may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with VanEck Morningstar and VanEck Vectors

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

The idea behind VanEck Morningstar International and VanEck Vectors 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.