Correlation Between FlexShares ESG and Northern Trust
Can any of the company-specific risk be diversified away by investing in both FlexShares ESG and Northern 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 ESG and Northern Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FlexShares ESG Climate and Northern Trust, you can compare the effects of market volatilities on FlexShares ESG and Northern 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 ESG with a short position of Northern Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of FlexShares ESG and Northern Trust.
Diversification Opportunities for FlexShares ESG and Northern Trust
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between FlexShares and Northern is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding FlexShares ESG Climate and Northern Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Trust and FlexShares ESG 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 ESG Climate are associated (or correlated) with Northern Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Trust has no effect on the direction of FlexShares ESG i.e., FlexShares ESG and Northern Trust go up and down completely randomly.
Pair Corralation between FlexShares ESG and Northern Trust
If you would invest 4,427 in FlexShares ESG Climate on August 26, 2024 and sell it today you would earn a total of 506.00 from holding FlexShares ESG Climate or generate 11.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 0.3% |
| Values | Daily Returns |
FlexShares ESG Climate vs. Northern Trust
Performance |
| Timeline |
| FlexShares ESG Climate |
| Northern Trust |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
FlexShares ESG and Northern Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FlexShares ESG and Northern Trust
The main advantage of trading using opposite FlexShares ESG and Northern Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FlexShares ESG position performs unexpectedly, Northern 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 Northern Trust will offset losses from the drop in Northern Trust's long position.| FlexShares ESG vs. Dimensional Core Equity | FlexShares ESG vs. Dimensional Emerging Core | FlexShares ESG vs. Dimensional Targeted Value | FlexShares ESG vs. Dimensional Small Cap |
| Northern Trust vs. Invesco PureBeta MSCI | Northern Trust vs. Aquagold International | Northern Trust vs. Morningstar Unconstrained Allocation | Northern Trust vs. High Yield Municipal Fund |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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