Correlation Between FlexShares ESG and FlexShares ESG
Can any of the company-specific risk be diversified away by investing in both FlexShares ESG and FlexShares ESG 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 FlexShares ESG 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 FlexShares ESG Climate, you can compare the effects of market volatilities on FlexShares ESG and FlexShares ESG 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 FlexShares ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of FlexShares ESG and FlexShares ESG.
Diversification Opportunities for FlexShares ESG and FlexShares ESG
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FlexShares and FlexShares is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding FlexShares ESG Climate and FlexShares ESG Climate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShares ESG Climate 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 FlexShares ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShares ESG Climate has no effect on the direction of FlexShares ESG i.e., FlexShares ESG and FlexShares ESG go up and down completely randomly.
Pair Corralation between FlexShares ESG and FlexShares ESG
Given the investment horizon of 90 days FlexShares ESG is expected to generate 1.99 times less return on investment than FlexShares ESG. In addition to that, FlexShares ESG is 1.01 times more volatile than FlexShares ESG Climate. It trades about 0.05 of its total potential returns per unit of risk. FlexShares ESG Climate is currently generating about 0.1 per unit of volatility. If you would invest 4,464 in FlexShares ESG Climate on August 26, 2024 and sell it today you would earn a total of 2,228 from holding FlexShares ESG Climate or generate 49.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FlexShares ESG Climate vs. FlexShares ESG Climate
Performance |
| Timeline |
| FlexShares ESG Climate |
| FlexShares ESG Climate |
FlexShares ESG and FlexShares ESG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FlexShares ESG and FlexShares ESG
The main advantage of trading using opposite FlexShares ESG and FlexShares ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FlexShares ESG position performs unexpectedly, FlexShares ESG 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 ESG will offset losses from the drop in FlexShares ESG'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 |
| FlexShares ESG vs. FlexShares ESG Climate | FlexShares ESG vs. FlexShares ESG Climate | FlexShares ESG vs. Nushares ETF Trust |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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