Correlation Between IShares 5 and FlexShares ESG
Can any of the company-specific risk be diversified away by investing in both IShares 5 and FlexShares ESG 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 5 and FlexShares ESG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares 5 10 Year and FlexShares ESG Climate, you can compare the effects of market volatilities on IShares 5 and FlexShares ESG 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 5 with a short position of FlexShares ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares 5 and FlexShares ESG.
Diversification Opportunities for IShares 5 and FlexShares ESG
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between IShares and FlexShares is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding iShares 5 10 Year and FlexShares ESG Climate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShares ESG Climate and IShares 5 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 5 10 Year are associated (or correlated) with FlexShares ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShares ESG Climate has no effect on the direction of IShares 5 i.e., IShares 5 and FlexShares ESG go up and down completely randomly.
Pair Corralation between IShares 5 and FlexShares ESG
Given the investment horizon of 90 days IShares 5 is expected to generate 1.34 times less return on investment than FlexShares ESG. But when comparing it to its historical volatility, iShares 5 10 Year is 1.13 times less risky than FlexShares ESG. It trades about 0.04 of its potential returns per unit of risk. FlexShares ESG Climate is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 4,109 in FlexShares ESG Climate on August 29, 2024 and sell it today you would earn a total of 17.00 from holding FlexShares ESG Climate or generate 0.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares 5 10 Year vs. FlexShares ESG Climate
Performance |
| Timeline |
| iShares 5 10 |
| FlexShares ESG Climate |
IShares 5 and FlexShares ESG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares 5 and FlexShares ESG
The main advantage of trading using opposite IShares 5 and FlexShares ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares 5 position performs unexpectedly, FlexShares ESG 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 ESG will offset losses from the drop in FlexShares ESG's long position.| IShares 5 vs. Schwab 1 5 Year | IShares 5 vs. Schwab Long Term Treasury | IShares 5 vs. Schwab Intermediate Term Treasury | IShares 5 vs. Schwab Short Term Treasury |
| FlexShares ESG vs. iShares ESG Advanced | FlexShares ESG vs. FlexShares ESG Climate | FlexShares ESG vs. FlexShares ESG Climate | FlexShares ESG vs. Franklin Liberty Investment |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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