Correlation Between FlexShares Global and IShares
Can any of the company-specific risk be diversified away by investing in both FlexShares Global and IShares 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 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, you can compare the effects of market volatilities on FlexShares Global and IShares 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. Check out your portfolio center. Please also check ongoing floating volatility patterns of FlexShares Global and IShares.
Diversification Opportunities for FlexShares Global and IShares
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FlexShares and IShares is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding FlexShares Global Quality and IShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IShares 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. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IShares has no effect on the direction of FlexShares Global i.e., FlexShares Global and IShares go up and down completely randomly.
Pair Corralation between FlexShares Global and IShares
Given the investment horizon of 90 days FlexShares Global Quality is expected to generate 1.02 times more return on investment than IShares. However, FlexShares Global is 1.02 times more volatile than IShares. It trades about 0.04 of its potential returns per unit of risk. IShares is currently generating about 0.01 per unit of risk. If you would invest 5,128 in FlexShares Global Quality on August 28, 2024 and sell it today you would earn a total of 1,046 from holding FlexShares Global Quality or generate 20.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 85.25% |
| Values | Daily Returns |
FlexShares Global Quality vs. IShares
Performance |
| Timeline |
| FlexShares Global Quality |
| IShares |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
FlexShares Global and IShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FlexShares Global and IShares
The main advantage of trading using opposite FlexShares Global and IShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FlexShares Global position performs unexpectedly, IShares 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 will offset losses from the drop in IShares' long position.| FlexShares Global vs. iShares International Treasury | FlexShares Global vs. iShares 1 3 Year | FlexShares Global vs. iShares MSCI Emerging |
| IShares vs. iShares International Developed | IShares vs. SPDR Dow Jones | IShares vs. iShares Residential and | IShares vs. iShares Global Consumer |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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