Correlation Between FlexShares Global and IShares International
Can any of the company-specific risk be diversified away by investing in both FlexShares Global and IShares International 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 Global and IShares International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FlexShares Global Quality and iShares International Treasury, you can compare the effects of market volatilities on FlexShares Global and IShares International 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 Global with a short position of IShares International. Check out your portfolio center. Please also check ongoing floating volatility patterns of FlexShares Global and IShares International.
Diversification Opportunities for FlexShares Global and IShares International
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FlexShares and IShares is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding FlexShares Global Quality and iShares International Treasury in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares International and FlexShares Global 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 Global Quality are associated (or correlated) with IShares International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares International has no effect on the direction of FlexShares Global i.e., FlexShares Global and IShares International go up and down completely randomly.
Pair Corralation between FlexShares Global and IShares International
Given the investment horizon of 90 days FlexShares Global Quality is expected to generate 1.13 times more return on investment than IShares International. However, FlexShares Global is 1.13 times more volatile than iShares International Treasury. It trades about 0.13 of its potential returns per unit of risk. iShares International Treasury is currently generating about -0.04 per unit of risk. If you would invest 6,094 in FlexShares Global Quality on August 30, 2024 and sell it today you would earn a total of 143.00 from holding FlexShares Global Quality or generate 2.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
FlexShares Global Quality vs. iShares International Treasury
Performance |
| Timeline |
| FlexShares Global Quality |
| iShares International |
FlexShares Global and IShares International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FlexShares Global and IShares International
The main advantage of trading using opposite FlexShares Global and IShares International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FlexShares Global position performs unexpectedly, IShares International 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 International will offset losses from the drop in IShares International's long position.| FlexShares Global vs. FlexShares International Quality | FlexShares Global vs. FlexShares International Quality | FlexShares Global vs. IQ Real Estate | FlexShares Global vs. FlexShares Quality Dividend |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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