Correlation Between Vanguard Global and VanEck MSCI

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

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

Diversification Opportunities for Vanguard Global and VanEck MSCI

-0.46

Correlation Coefficient

Vanguard Global  VanEck MSCI

Very good diversification

The 3 months correlation between Vanguard and VanEck is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Global Infrastructure and VanEck MSCI International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck MSCI International and Vanguard Global 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 Vanguard Global Infrastructure are associated (or correlated) with VanEck MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck MSCI International has no effect on the direction of Vanguard Global i.e., Vanguard Global and VanEck MSCI go up and down completely randomly.

Pair Corralation between Vanguard Global and VanEck MSCI

Assuming the 90 days trading horizon Vanguard Global Infrastructure is expected to generate 1.08 times more return on investment than VanEck MSCI. However, Vanguard Global is 1.08 times more volatile than VanEck MSCI International. It trades about 0.08 of its potential returns per unit of risk. VanEck MSCI International is currently generating about -0.07 per unit of risk. If you would invest  7,082  in Vanguard Global Infrastructure on December 31, 2024 and sell it today you would earn a total of  305.00  from holding Vanguard Global Infrastructure or generate 4.31% return on investment over 90 days.

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

Vanguard Global Infrastructure  vs.  VanEck MSCI International

Vanguard Global Infr

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Global Infrastructure are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Vanguard Global is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

VanEck MSCI International

Risk-Adjusted Performance

Very Weak

Over the last 90 days VanEck MSCI International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, VanEck MSCI 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 Vanguard Global and VanEck MSCI

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

The idea behind Vanguard Global Infrastructure and VanEck MSCI International 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.