Correlation Between IShares Global and FlexShares STOXX
Can any of the company-specific risk be diversified away by investing in both IShares Global and FlexShares STOXX 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 IShares Global and FlexShares STOXX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Global Infrastructure and FlexShares STOXX Global, you can compare the effects of market volatilities on IShares Global and FlexShares STOXX 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 IShares Global with a short position of FlexShares STOXX. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Global and FlexShares STOXX.
Diversification Opportunities for IShares Global and FlexShares STOXX
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and FlexShares is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding iShares Global Infrastructure and FlexShares STOXX Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShares STOXX Global and IShares 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 iShares Global Infrastructure are associated (or correlated) with FlexShares STOXX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShares STOXX Global has no effect on the direction of IShares Global i.e., IShares Global and FlexShares STOXX go up and down completely randomly.
Pair Corralation between IShares Global and FlexShares STOXX
Considering the 90-day investment horizon iShares Global Infrastructure is expected to generate 1.03 times more return on investment than FlexShares STOXX. However, IShares Global is 1.03 times more volatile than FlexShares STOXX Global. It trades about 0.36 of its potential returns per unit of risk. FlexShares STOXX Global is currently generating about 0.13 per unit of risk. If you would invest 5,188 in iShares Global Infrastructure on October 21, 2024 and sell it today you would earn a total of 235.00 from holding iShares Global Infrastructure or generate 4.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Global Infrastructure vs. FlexShares STOXX Global
Performance |
| Timeline |
| iShares Global Infra |
| FlexShares STOXX Global |
IShares Global and FlexShares STOXX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Global and FlexShares STOXX
The main advantage of trading using opposite IShares Global and FlexShares STOXX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Global position performs unexpectedly, FlexShares STOXX 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 STOXX will offset losses from the drop in FlexShares STOXX's long position.| IShares Global vs. SPDR SP Global | IShares Global vs. FlexShares STOXX Global | IShares Global vs. iShares Infrastructure ETF | IShares Global vs. iShares Global Utilities |
| FlexShares STOXX vs. ProShares DJ Brookfield | FlexShares STOXX vs. iShares Global Infrastructure | FlexShares STOXX vs. SPDR SP Global | FlexShares STOXX vs. iShares Infrastructure ETF |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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