Correlation Between IShares MSCI and VanEck India

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

By analyzing existing cross correlation between iShares MSCI India and VanEck India Growth, you can compare the effects of market volatilities on IShares MSCI and VanEck India 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 India. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and VanEck India.

Diversification Opportunities for IShares MSCI and VanEck India

0.96

Correlation Coefficient

IShares MSCI  VanEck India

Almost no diversification

The 3 months correlation between IShares and VanEck is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI India and VanEck India Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck India Growth 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 India are associated (or correlated) with VanEck India. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck India Growth has no effect on the direction of IShares MSCI i.e., IShares MSCI and VanEck India go up and down completely randomly.

Pair Corralation between IShares MSCI and VanEck India

Given the investment horizon of 90 days iShares MSCI India is expected to generate 1.28 times more return on investment than VanEck India. However, IShares MSCI is 1.28 times more volatile than VanEck India Growth. It trades about -0.1 of its potential returns per unit of risk. VanEck India Growth is currently generating about -0.16 per unit of risk. If you would invest  7,568  in iShares MSCI India on December 29, 2024 and sell it today you would lose (768.00) from holding iShares MSCI India or give up 10.15% of portfolio value over 90 days.

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

iShares MSCI India  vs.  VanEck India Growth

iShares MSCI India

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares MSCI India has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Etf's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

VanEck India Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days VanEck India Growth has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Etf's forward indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the ETF investors.

Pair Trading with IShares MSCI and VanEck India

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

The idea behind iShares MSCI India and VanEck India Growth 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.