Correlation Between FlexShares STOXX and IShares Trust
Can any of the company-specific risk be diversified away by investing in both FlexShares STOXX and IShares Trust 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 FlexShares STOXX and IShares Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FlexShares STOXX Global and iShares Trust , you can compare the effects of market volatilities on FlexShares STOXX and IShares Trust 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 FlexShares STOXX with a short position of IShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of FlexShares STOXX and IShares Trust.
Diversification Opportunities for FlexShares STOXX and IShares Trust
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between FlexShares and IShares is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding FlexShares STOXX Global and iShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Trust and FlexShares STOXX 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 FlexShares STOXX Global are associated (or correlated) with IShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Trust has no effect on the direction of FlexShares STOXX i.e., FlexShares STOXX and IShares Trust go up and down completely randomly.
Pair Corralation between FlexShares STOXX and IShares Trust
Given the investment horizon of 90 days FlexShares STOXX Global is expected to generate 1.94 times more return on investment than IShares Trust. However, FlexShares STOXX is 1.94 times more volatile than iShares Trust . It trades about 0.1 of its potential returns per unit of risk. iShares Trust is currently generating about 0.03 per unit of risk. If you would invest 12,365 in FlexShares STOXX Global on September 3, 2024 and sell it today you would earn a total of 4,950 from holding FlexShares STOXX Global or generate 40.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FlexShares STOXX Global vs. iShares Trust
Performance |
| Timeline |
| FlexShares STOXX Global |
| iShares Trust |
FlexShares STOXX and IShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FlexShares STOXX and IShares Trust
The main advantage of trading using opposite FlexShares STOXX and IShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FlexShares STOXX position performs unexpectedly, IShares Trust 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 Trust will offset losses from the drop in IShares Trust's long position.| FlexShares STOXX vs. FlexShares Quality Large | FlexShares STOXX vs. FlexShares Disciplined Duration | FlexShares STOXX vs. FlexShares Real Assets | FlexShares STOXX vs. First Trust Developed |
| IShares Trust vs. iShares ESG Aggregate | IShares Trust vs. iShares ESG Advanced | IShares Trust vs. iShares ESG Advanced | IShares Trust vs. iShares ESG USD |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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