Correlation Between VanEck Vietnam and IShares MSCI

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

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

Diversification Opportunities for VanEck Vietnam and IShares MSCI

0.29

Correlation Coefficient

VanEck Vietnam  IShares MSCI

Modest diversification

The 3 months correlation between VanEck and IShares is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Vietnam ETF and iShares MSCI Philippines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI Philippines and VanEck Vietnam 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 Vietnam ETF are associated (or correlated) with IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI Philippines has no effect on the direction of VanEck Vietnam i.e., VanEck Vietnam and IShares MSCI go up and down completely randomly.

Pair Corralation between VanEck Vietnam and IShares MSCI

Considering the 90-day investment horizon VanEck Vietnam ETF is expected to under-perform the IShares MSCI. But the etf apears to be less risky and, when comparing its historical volatility, VanEck Vietnam ETF is 1.0 times less risky than IShares MSCI. The etf trades about -0.05 of its potential returns per unit of risk. The iShares MSCI Philippines is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  2,683  in iShares MSCI Philippines on December 2, 2024 and sell it today you would lose (283.00) from holding iShares MSCI Philippines or give up 10.55% of portfolio value over 90 days.

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

VanEck Vietnam ETF  vs.  iShares MSCI Philippines

VanEck Vietnam ETF

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Vietnam ETF are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, VanEck Vietnam is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

iShares MSCI Philippines

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares MSCI Philippines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Etf's technical indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

Pair Trading with VanEck Vietnam and IShares MSCI

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

The idea behind VanEck Vietnam ETF and iShares MSCI Philippines 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.