Correlation Between IShares MSCI and VanEck Short
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and VanEck Short 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 Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares MSCI EAFE and VanEck Short Muni, you can compare the effects of market volatilities on IShares MSCI and VanEck Short 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 Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and VanEck Short.
Diversification Opportunities for IShares MSCI and VanEck Short
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between IShares and VanEck is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI EAFE and VanEck Short Muni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Short Muni 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 EAFE are associated (or correlated) with VanEck Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Short Muni has no effect on the direction of IShares MSCI i.e., IShares MSCI and VanEck Short go up and down completely randomly.
Pair Corralation between IShares MSCI and VanEck Short
Considering the 90-day investment horizon iShares MSCI EAFE is expected to generate 6.03 times more return on investment than VanEck Short. However, IShares MSCI is 6.03 times more volatile than VanEck Short Muni. It trades about 0.02 of its potential returns per unit of risk. VanEck Short Muni is currently generating about 0.05 per unit of risk. If you would invest 5,754 in iShares MSCI EAFE on January 25, 2024 and sell it today you would earn a total of 399.00 from holding iShares MSCI EAFE or generate 6.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares MSCI EAFE vs. VanEck Short Muni
Performance |
| Timeline |
| iShares MSCI EAFE |
| VanEck Short Muni |
IShares MSCI and VanEck Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and VanEck Short
The main advantage of trading using opposite IShares MSCI and VanEck Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, VanEck Short 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 Short will offset losses from the drop in VanEck Short's long position.| IShares MSCI vs. Dimensional ETF Trust | IShares MSCI vs. Vanguard Small Cap Index | IShares MSCI vs. First Trust Multi Manager | IShares MSCI vs. Vanguard SP Small Cap |
| VanEck Short vs. SSGA Active Trust | VanEck Short vs. SPDR Nuveen Municipal | VanEck Short vs. iShares Short Maturity | VanEck Short vs. First Trust Flexible |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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