Correlation Between VanEck Vietnam and IShares India

Can any of the company-specific risk be diversified away by investing in both VanEck Vietnam and IShares 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 VanEck Vietnam and IShares India 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 India 50, you can compare the effects of market volatilities on VanEck Vietnam and IShares 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 VanEck Vietnam with a short position of IShares India. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Vietnam and IShares India.

Diversification Opportunities for VanEck Vietnam and IShares India

0.93

Correlation Coefficient

VanEck Vietnam  IShares India

Almost no diversification

The 3 months correlation between VanEck and IShares is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Vietnam ETF and iShares India 50 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares India 50 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 India. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares India 50 has no effect on the direction of VanEck Vietnam i.e., VanEck Vietnam and IShares India go up and down completely randomly.

Pair Corralation between VanEck Vietnam and IShares India

Considering the 90-day investment horizon VanEck Vietnam ETF is expected to generate 1.28 times more return on investment than IShares India. However, VanEck Vietnam is 1.28 times more volatile than iShares India 50. It trades about -0.06 of its potential returns per unit of risk. iShares India 50 is currently generating about -0.08 per unit of risk. If you would invest  1,221  in VanEck Vietnam ETF on September 16, 2024 and sell it today you would lose (48.00) from holding VanEck Vietnam ETF or give up 3.93% of portfolio value over 90 days.

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

VanEck Vietnam ETF  vs.  iShares India 50

VanEck Vietnam ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VanEck Vietnam ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, VanEck Vietnam is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

iShares India 50

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares India 50 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, IShares India is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with VanEck Vietnam and IShares India

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

The idea behind VanEck Vietnam ETF and iShares India 50 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.