Correlation Between FlexShares International and Global X
Can any of the company-specific risk be diversified away by investing in both FlexShares International and Global X 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 International and Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FlexShares International Quality and Global X MSCI, you can compare the effects of market volatilities on FlexShares International and Global X 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 International with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of FlexShares International and Global X.
Diversification Opportunities for FlexShares International and Global X
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between FlexShares and Global is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding FlexShares International Quali and Global X MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X MSCI and FlexShares 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 FlexShares International Quality are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X MSCI has no effect on the direction of FlexShares International i.e., FlexShares International and Global X go up and down completely randomly.
Pair Corralation between FlexShares International and Global X
Given the investment horizon of 90 days FlexShares International is expected to generate 4.98 times less return on investment than Global X. But when comparing it to its historical volatility, FlexShares International Quality is 1.63 times less risky than Global X. It trades about 0.07 of its potential returns per unit of risk. Global X MSCI is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 2,415 in Global X MSCI on September 13, 2024 and sell it today you would earn a total of 100.99 from holding Global X MSCI or generate 4.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
FlexShares International Quali vs. Global X MSCI
Performance |
| Timeline |
| FlexShares International |
| Global X MSCI |
FlexShares International and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FlexShares International and Global X
The main advantage of trading using opposite FlexShares International and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FlexShares International position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X's long position.The idea behind FlexShares International Quality and Global X MSCI pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Global X vs. Global X MSCI | Global X vs. Global X Alternative | Global X vs. iShares Emerging Markets | Global X vs. Global X SuperDividend |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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