Correlation Between IShares International and FlexShares Global
Can any of the company-specific risk be diversified away by investing in both IShares International and FlexShares 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 IShares International and FlexShares Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares International Treasury and FlexShares Global Quality, you can compare the effects of market volatilities on IShares International and FlexShares 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 IShares International with a short position of FlexShares Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares International and FlexShares Global.
Diversification Opportunities for IShares International and FlexShares Global
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and FlexShares is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding iShares International Treasury and FlexShares Global Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShares Global Quality and IShares International 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 International Treasury are associated (or correlated) with FlexShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShares Global Quality has no effect on the direction of IShares International i.e., IShares International and FlexShares Global go up and down completely randomly.
Pair Corralation between IShares International and FlexShares Global
Given the investment horizon of 90 days iShares International Treasury is expected to under-perform the FlexShares Global. But the etf apears to be less risky and, when comparing its historical volatility, iShares International Treasury is 1.59 times less risky than FlexShares Global. The etf trades about -0.01 of its potential returns per unit of risk. The FlexShares Global Quality is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 5,371 in FlexShares Global Quality on August 27, 2024 and sell it today you would earn a total of 745.00 from holding FlexShares Global Quality or generate 13.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares International Treasury vs. FlexShares Global Quality
Performance |
| Timeline |
| iShares International |
| FlexShares Global Quality |
IShares International and FlexShares Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares International and FlexShares Global
The main advantage of trading using opposite IShares International and FlexShares Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares International position performs unexpectedly, FlexShares 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 FlexShares Global will offset losses from the drop in FlexShares Global's long position.| IShares International vs. SPDR Bloomberg International | IShares International vs. SPDR Bloomberg Short | IShares International vs. iShares 1 3 Year |
| FlexShares Global vs. iShares International Treasury | FlexShares Global vs. iShares 1 3 Year | FlexShares Global vs. iShares MSCI Emerging |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas |