Correlation Between FlexShares High and IShares International
Can any of the company-specific risk be diversified away by investing in both FlexShares High 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 High 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 High Yield and iShares International High, you can compare the effects of market volatilities on FlexShares High 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 High with a short position of IShares International. Check out your portfolio center. Please also check ongoing floating volatility patterns of FlexShares High and IShares International.
Diversification Opportunities for FlexShares High and IShares International
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FlexShares and IShares is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding FlexShares High Yield and iShares International High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares International and FlexShares High 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 High Yield 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 High i.e., FlexShares High and IShares International go up and down completely randomly.
Pair Corralation between FlexShares High and IShares International
Given the investment horizon of 90 days FlexShares High Yield is expected to generate 0.5 times more return on investment than IShares International. However, FlexShares High Yield is 1.99 times less risky than IShares International. It trades about 0.23 of its potential returns per unit of risk. iShares International High is currently generating about 0.03 per unit of risk. If you would invest 3,901 in FlexShares High Yield on September 2, 2024 and sell it today you would earn a total of 250.00 from holding FlexShares High Yield or generate 6.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FlexShares High Yield vs. iShares International High
Performance |
| Timeline |
| FlexShares High Yield |
| iShares International |
FlexShares High and IShares International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FlexShares High and IShares International
The main advantage of trading using opposite FlexShares High and IShares International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FlexShares High 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 High vs. Xtrackers High Beta | FlexShares High vs. iShares Edge High | FlexShares High vs. Xtrackers USD High | FlexShares High vs. iShares Interest Rate |
| IShares International vs. iShares Intl High | IShares International vs. iShares JP Morgan | IShares International vs. VanEck International High | IShares International vs. iShares JP Morgan |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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