Correlation Between Invesco BulletShares and FlexShares Core
Can any of the company-specific risk be diversified away by investing in both Invesco BulletShares and FlexShares Core 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 Invesco BulletShares and FlexShares Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco BulletShares 2025 and FlexShares Core Select, you can compare the effects of market volatilities on Invesco BulletShares and FlexShares Core 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 Invesco BulletShares with a short position of FlexShares Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco BulletShares and FlexShares Core.
Diversification Opportunities for Invesco BulletShares and FlexShares Core
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Invesco and FlexShares is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Invesco BulletShares 2025 and FlexShares Core Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShares Core Select and Invesco BulletShares 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 Invesco BulletShares 2025 are associated (or correlated) with FlexShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShares Core Select has no effect on the direction of Invesco BulletShares i.e., Invesco BulletShares and FlexShares Core go up and down completely randomly.
Pair Corralation between Invesco BulletShares and FlexShares Core
Given the investment horizon of 90 days Invesco BulletShares is expected to generate 2.17 times less return on investment than FlexShares Core. But when comparing it to its historical volatility, Invesco BulletShares 2025 is 4.09 times less risky than FlexShares Core. It trades about 0.34 of its potential returns per unit of risk. FlexShares Core Select is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 2,198 in FlexShares Core Select on September 2, 2024 and sell it today you would earn a total of 31.00 from holding FlexShares Core Select or generate 1.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco BulletShares 2025 vs. FlexShares Core Select
Performance |
| Timeline |
| Invesco BulletShares 2025 |
| FlexShares Core Select |
Invesco BulletShares and FlexShares Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco BulletShares and FlexShares Core
The main advantage of trading using opposite Invesco BulletShares and FlexShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco BulletShares position performs unexpectedly, FlexShares Core 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 FlexShares Core will offset losses from the drop in FlexShares Core's long position.The idea behind Invesco BulletShares 2025 and FlexShares Core Select 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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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 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.
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