Correlation Between VanEck Vectors and IShares SPASX

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

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

Diversification Opportunities for VanEck Vectors and IShares SPASX

0.67

Correlation Coefficient

VanEck Vectors  IShares SPASX

Poor diversification

The 3 months correlation between VanEck and IShares is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Vectors MSCI and iShares SPASX Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares SPASX Small and VanEck Vectors 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 Vectors MSCI are associated (or correlated) with IShares SPASX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares SPASX Small has no effect on the direction of VanEck Vectors i.e., VanEck Vectors and IShares SPASX go up and down completely randomly.

Pair Corralation between VanEck Vectors and IShares SPASX

Assuming the 90 days trading horizon VanEck Vectors is expected to generate 1.62 times less return on investment than IShares SPASX. In addition to that, VanEck Vectors is 1.34 times more volatile than iShares SPASX Small. It trades about 0.1 of its total potential returns per unit of risk. iShares SPASX Small is currently generating about 0.22 per unit of volatility. If you would invest  444.00  in iShares SPASX Small on September 4, 2024 and sell it today you would earn a total of  48.00  from holding iShares SPASX Small or generate 10.81% return on investment over 90 days.

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

VanEck Vectors MSCI  vs.  iShares SPASX Small

VanEck Vectors MSCI

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Vectors MSCI are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, VanEck Vectors is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

iShares SPASX Small

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares SPASX Small are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, IShares SPASX may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with VanEck Vectors and IShares SPASX

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

The idea behind VanEck Vectors MSCI and iShares SPASX Small 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.