Correlation Between FlexShares Global and FlexShares International
Can any of the company-specific risk be diversified away by investing in both FlexShares Global and FlexShares 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 FlexShares 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 FlexShares International Quality, you can compare the effects of market volatilities on FlexShares Global and FlexShares 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 FlexShares International. Check out your portfolio center. Please also check ongoing floating volatility patterns of FlexShares Global and FlexShares International.
Diversification Opportunities for FlexShares Global and FlexShares International
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between FlexShares and FlexShares is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding FlexShares Global Quality and FlexShares International Quali in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShares 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 FlexShares International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShares International has no effect on the direction of FlexShares Global i.e., FlexShares Global and FlexShares International go up and down completely randomly.
Pair Corralation between FlexShares Global and FlexShares International
Given the investment horizon of 90 days FlexShares Global Quality is expected to generate 1.02 times more return on investment than FlexShares International. However, FlexShares Global is 1.02 times more volatile than FlexShares International Quality. It trades about 0.06 of its potential returns per unit of risk. FlexShares International Quality is currently generating about 0.05 per unit of risk. If you would invest 5,082 in FlexShares Global Quality on September 2, 2024 and sell it today you would earn a total of 1,131 from holding FlexShares Global Quality or generate 22.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FlexShares Global Quality vs. FlexShares International Quali
Performance |
| Timeline |
| FlexShares Global Quality |
| FlexShares International |
FlexShares Global and FlexShares International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FlexShares Global and FlexShares International
The main advantage of trading using opposite FlexShares Global and FlexShares International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FlexShares Global position performs unexpectedly, FlexShares 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 FlexShares International will offset losses from the drop in FlexShares International's long position.| FlexShares Global vs. FlexShares International Quality | FlexShares Global vs. FlexShares International Quality | FlexShares Global vs. FlexShares Quality Dividend | FlexShares Global vs. First Trust 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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