Correlation Between FlexShares Credit and IShares Core
Can any of the company-specific risk be diversified away by investing in both FlexShares Credit and IShares Core 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 Credit and IShares Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FlexShares Credit Scored Long and iShares Core 10, you can compare the effects of market volatilities on FlexShares Credit and IShares Core 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 Credit with a short position of IShares Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of FlexShares Credit and IShares Core.
Diversification Opportunities for FlexShares Credit and IShares Core
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between FlexShares and IShares is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding FlexShares Credit Scored Long and iShares Core 10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core 10 and FlexShares Credit 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 Credit Scored Long are associated (or correlated) with IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core 10 has no effect on the direction of FlexShares Credit i.e., FlexShares Credit and IShares Core go up and down completely randomly.
Pair Corralation between FlexShares Credit and IShares Core
Given the investment horizon of 90 days FlexShares Credit Scored Long is expected to generate 0.95 times more return on investment than IShares Core. However, FlexShares Credit Scored Long is 1.05 times less risky than IShares Core. It trades about 0.03 of its potential returns per unit of risk. iShares Core 10 is currently generating about 0.02 per unit of risk. If you would invest 4,047 in FlexShares Credit Scored Long on November 5, 2024 and sell it today you would earn a total of 184.00 from holding FlexShares Credit Scored Long or generate 4.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
FlexShares Credit Scored Long vs. iShares Core 10
Performance |
| Timeline |
| FlexShares Credit |
| iShares Core 10 |
FlexShares Credit and IShares Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FlexShares Credit and IShares Core
The main advantage of trading using opposite FlexShares Credit and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FlexShares Credit position performs unexpectedly, IShares Core 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 IShares Core will offset losses from the drop in IShares Core's long position.| FlexShares Credit vs. SPDR Barclays Long | FlexShares Credit vs. FlexShares Credit Scored Corporate | FlexShares Credit vs. FlexShares Disciplined Duration | FlexShares Credit vs. FlexShares Quality Large |
| IShares Core vs. iShares Core 1 5 | IShares Core vs. iShares Agency Bond | IShares Core vs. iShares Intermediate GovernmentCredit | IShares Core vs. iShares GNMA Bond |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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