Correlation Between FlexShares ESG and Nushares ETF
Can any of the company-specific risk be diversified away by investing in both FlexShares ESG and Nushares ETF 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 Nushares ETF 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 Nushares ETF Trust, you can compare the effects of market volatilities on FlexShares ESG and Nushares ETF 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 Nushares ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of FlexShares ESG and Nushares ETF.
Diversification Opportunities for FlexShares ESG and Nushares ETF
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FlexShares and Nushares is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding FlexShares ESG Climate and Nushares ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nushares ETF 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 Nushares ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nushares ETF Trust has no effect on the direction of FlexShares ESG i.e., FlexShares ESG and Nushares ETF go up and down completely randomly.
Pair Corralation between FlexShares ESG and Nushares ETF
Given the investment horizon of 90 days FlexShares ESG is expected to generate 5.14 times less return on investment than Nushares ETF. But when comparing it to its historical volatility, FlexShares ESG Climate is 1.85 times less risky than Nushares ETF. It trades about 0.08 of its potential returns per unit of risk. Nushares ETF Trust is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 2,969 in Nushares ETF Trust on August 29, 2024 and sell it today you would earn a total of 114.00 from holding Nushares ETF Trust or generate 3.84% 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. Nushares ETF Trust
Performance |
| Timeline |
| FlexShares ESG Climate |
| Nushares ETF Trust |
FlexShares ESG and Nushares ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FlexShares ESG and Nushares ETF
The main advantage of trading using opposite FlexShares ESG and Nushares ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FlexShares ESG position performs unexpectedly, Nushares ETF 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 Nushares ETF will offset losses from the drop in Nushares ETF's long position.| FlexShares ESG vs. iShares ESG Advanced | FlexShares ESG vs. FlexShares ESG Climate | FlexShares ESG vs. FlexShares ESG Climate | FlexShares ESG vs. Franklin Liberty Investment |
| Nushares ETF vs. Nuveen Growth Opportunities | Nushares ETF vs. Nuveen ESG Large Cap | Nushares ETF vs. Invesco ESG NASDAQ | Nushares ETF vs. Nuveen ESG Mid Cap |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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