Correlation Between FlexShares ESG and IShares Core
Can any of the company-specific risk be diversified away by investing in both FlexShares ESG and IShares 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 FlexShares ESG and IShares Core 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 iShares Core SP, you can compare the effects of market volatilities on FlexShares ESG and IShares 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 FlexShares ESG with a short position of IShares Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of FlexShares ESG and IShares Core.
Diversification Opportunities for FlexShares ESG and IShares Core
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between FlexShares and IShares is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding FlexShares ESG Climate and iShares Core SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core SP 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 IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core SP has no effect on the direction of FlexShares ESG i.e., FlexShares ESG and IShares Core go up and down completely randomly.
Pair Corralation between FlexShares ESG and IShares Core
Given the investment horizon of 90 days FlexShares ESG Climate is expected to under-perform the IShares Core. In addition to that, FlexShares ESG is 1.07 times more volatile than iShares Core SP. It trades about -0.05 of its total potential returns per unit of risk. iShares Core SP is currently generating about 0.39 per unit of volatility. If you would invest 12,505 in iShares Core SP on September 4, 2024 and sell it today you would earn a total of 834.00 from holding iShares Core SP or generate 6.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FlexShares ESG Climate vs. iShares Core SP
Performance |
| Timeline |
| FlexShares ESG Climate |
| iShares Core SP |
FlexShares ESG and IShares Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FlexShares ESG and IShares Core
The main advantage of trading using opposite FlexShares ESG and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FlexShares ESG position performs unexpectedly, IShares 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 IShares Core will offset losses from the drop in IShares Core's long position.| FlexShares ESG vs. iShares Core SP | FlexShares ESG vs. iShares Core 1 5 | FlexShares ESG vs. iShares Core MSCI | FlexShares ESG vs. iShares Core MSCI |
| IShares Core vs. iShares Core MSCI | IShares Core vs. iShares Core MSCI | IShares Core vs. iShares Core MSCI | IShares Core vs. iShares Core SP |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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