Correlation Between IShares Trust and FlexShares Real
Can any of the company-specific risk be diversified away by investing in both IShares Trust and FlexShares Real 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 Trust and FlexShares Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Trust and FlexShares Real Assets, you can compare the effects of market volatilities on IShares Trust and FlexShares Real 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 Trust with a short position of FlexShares Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Trust and FlexShares Real.
Diversification Opportunities for IShares Trust and FlexShares Real
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and FlexShares is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and FlexShares Real Assets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShares Real Assets and IShares Trust 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 Trust are associated (or correlated) with FlexShares Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShares Real Assets has no effect on the direction of IShares Trust i.e., IShares Trust and FlexShares Real go up and down completely randomly.
Pair Corralation between IShares Trust and FlexShares Real
Given the investment horizon of 90 days iShares Trust is expected to generate 0.93 times more return on investment than FlexShares Real. However, iShares Trust is 1.07 times less risky than FlexShares Real. It trades about 0.13 of its potential returns per unit of risk. FlexShares Real Assets is currently generating about 0.11 per unit of risk. If you would invest 3,121 in iShares Trust on August 30, 2024 and sell it today you would earn a total of 47.00 from holding iShares Trust or generate 1.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Trust vs. FlexShares Real Assets
Performance |
| Timeline |
| iShares Trust |
| FlexShares Real Assets |
IShares Trust and FlexShares Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Trust and FlexShares Real
The main advantage of trading using opposite IShares Trust and FlexShares Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Trust position performs unexpectedly, FlexShares Real 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 Real will offset losses from the drop in FlexShares Real's long position.| IShares Trust vs. First Trust Multi Asset | IShares Trust vs. Collaborative Investment Series | IShares Trust vs. Akros Monthly Payout | IShares Trust vs. Northern Lights |
| FlexShares Real vs. Mackenzie Canadian Equity | FlexShares Real vs. Mackenzie Large Cap | FlexShares Real vs. BMO MSCI EAFE | FlexShares Real vs. BMO Long Federal |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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