Correlation Between IShares MSCI and VanEck Gold

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

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

Diversification Opportunities for IShares MSCI and VanEck Gold

0.97

Correlation Coefficient

IShares MSCI  VanEck Gold

Almost no diversification

The 3 months correlation between IShares and VanEck is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI Global and VanEck Gold Miners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Gold Miners and IShares MSCI 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 iShares MSCI Global are associated (or correlated) with VanEck Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Gold Miners has no effect on the direction of IShares MSCI i.e., IShares MSCI and VanEck Gold go up and down completely randomly.

Pair Corralation between IShares MSCI and VanEck Gold

Given the investment horizon of 90 days iShares MSCI Global is expected to under-perform the VanEck Gold. In addition to that, IShares MSCI is 1.12 times more volatile than VanEck Gold Miners. It trades about -0.1 of its total potential returns per unit of risk. VanEck Gold Miners is currently generating about -0.07 per unit of volatility. If you would invest  4,108  in VanEck Gold Miners on October 25, 2024 and sell it today you would lose (355.00) from holding VanEck Gold Miners or give up 8.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.33%
Values	Daily Returns

iShares MSCI Global  vs.  VanEck Gold Miners

iShares MSCI Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares MSCI Global has generated negative risk-adjusted returns adding no value to investors with long positions. Even with fragile performance in the last few months, the Etf's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the ETF retail investors.

VanEck Gold Miners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VanEck Gold Miners has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest sluggish performance, the Etf's 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 IShares MSCI and VanEck Gold

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

The idea behind iShares MSCI Global and VanEck Gold Miners 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.

Check out your portfolio center.

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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.