Correlation Between VanEck Vectors and IShares Core

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

Diversification Opportunities for VanEck Vectors and IShares Core

0.94

Correlation Coefficient

VanEck Vectors  IShares Core

Almost no diversification

The 3 months correlation between VanEck and IShares is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Vectors MSCI and iShares Core SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core SP 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 Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core SP has no effect on the direction of VanEck Vectors i.e., VanEck Vectors and IShares Core go up and down completely randomly.

Pair Corralation between VanEck Vectors and IShares Core

Assuming the 90 days trading horizon VanEck Vectors MSCI is expected to generate 0.88 times more return on investment than IShares Core. However, VanEck Vectors MSCI is 1.14 times less risky than IShares Core. It trades about -0.09 of its potential returns per unit of risk. iShares Core SP is currently generating about -0.12 per unit of risk. If you would invest  5,869  in VanEck Vectors MSCI on December 30, 2024 and sell it today you would lose (199.00) from holding VanEck Vectors MSCI or give up 3.39% of portfolio value over 90 days.

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

VanEck Vectors MSCI  vs.  iShares Core SP

VanEck Vectors MSCI

Risk-Adjusted Performance

Very Weak

Over the last 90 days VanEck Vectors MSCI has generated negative risk-adjusted returns adding no value to investors with long positions. 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 Core SP

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Core SP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, IShares Core is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with VanEck Vectors and IShares Core

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

The idea behind VanEck Vectors MSCI and iShares Core SP 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.