Correlation Between VanEck Inflation and SPDR MSCI

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

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

Diversification Opportunities for VanEck Inflation and SPDR MSCI

-0.42

Correlation Coefficient

VanEck Inflation  SPDR MSCI

Very good diversification

The 3 months correlation between VanEck and SPDR is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Inflation Allocation and SPDR MSCI EAFE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR MSCI EAFE and VanEck Inflation 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 Inflation Allocation are associated (or correlated) with SPDR MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR MSCI EAFE has no effect on the direction of VanEck Inflation i.e., VanEck Inflation and SPDR MSCI go up and down completely randomly.

Pair Corralation between VanEck Inflation and SPDR MSCI

Given the investment horizon of 90 days VanEck Inflation Allocation is expected to generate 0.92 times more return on investment than SPDR MSCI. However, VanEck Inflation Allocation is 1.09 times less risky than SPDR MSCI. It trades about 0.04 of its potential returns per unit of risk. SPDR MSCI EAFE is currently generating about 0.0 per unit of risk. If you would invest  2,697  in VanEck Inflation Allocation on September 20, 2024 and sell it today you would earn a total of  131.00  from holding VanEck Inflation Allocation or generate 4.86% return on investment over 90 days.

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

VanEck Inflation Allocation  vs.  SPDR MSCI EAFE

VanEck Inflation All

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VanEck Inflation Allocation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, VanEck Inflation is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

SPDR MSCI EAFE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPDR MSCI EAFE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Etf's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Pair Trading with VanEck Inflation and SPDR MSCI

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

The idea behind VanEck Inflation Allocation and SPDR MSCI EAFE 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.