Correlation Between FlexShares Global and IShares Global
Can any of the company-specific risk be diversified away by investing in both FlexShares Global and IShares Global 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 Global 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 Global REIT, you can compare the effects of market volatilities on FlexShares Global and IShares Global 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 Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of FlexShares Global and IShares Global.
Diversification Opportunities for FlexShares Global and IShares Global
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between FlexShares and IShares is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding FlexShares Global Quality and iShares Global REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Global REIT 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 Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Global REIT has no effect on the direction of FlexShares Global i.e., FlexShares Global and IShares Global go up and down completely randomly.
Pair Corralation between FlexShares Global and IShares Global
Given the investment horizon of 90 days FlexShares Global is expected to generate 1.05 times less return on investment than IShares Global. But when comparing it to its historical volatility, FlexShares Global Quality is 1.01 times less risky than IShares Global. It trades about 0.14 of its potential returns per unit of risk. iShares Global REIT is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 2,279 in iShares Global REIT on August 31, 2024 and sell it today you would earn a total of 352.00 from holding iShares Global REIT or generate 15.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
FlexShares Global Quality vs. iShares Global REIT
Performance |
| Timeline |
| FlexShares Global Quality |
| iShares Global REIT |
FlexShares Global and IShares Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FlexShares Global and IShares Global
The main advantage of trading using opposite FlexShares Global and IShares Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FlexShares Global position performs unexpectedly, IShares Global 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 Global will offset losses from the drop in IShares Global'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 |
| IShares Global vs. iShares Core REIT | IShares Global vs. Schwab REIT ETF | IShares Global vs. Global X SuperDividend | IShares Global vs. Fidelity MSCI Real |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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