Correlation Between FlexShares Credit and SPDR Barclays
Can any of the company-specific risk be diversified away by investing in both FlexShares Credit and SPDR Barclays 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 SPDR Barclays 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 SPDR Barclays Short, you can compare the effects of market volatilities on FlexShares Credit and SPDR Barclays 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 SPDR Barclays. Check out your portfolio center. Please also check ongoing floating volatility patterns of FlexShares Credit and SPDR Barclays.
Diversification Opportunities for FlexShares Credit and SPDR Barclays
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between FlexShares and SPDR is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding FlexShares Credit Scored Long and SPDR Barclays Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Barclays Short 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 SPDR Barclays. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Barclays Short has no effect on the direction of FlexShares Credit i.e., FlexShares Credit and SPDR Barclays go up and down completely randomly.
Pair Corralation between FlexShares Credit and SPDR Barclays
Given the investment horizon of 90 days FlexShares Credit is expected to generate 1.16 times less return on investment than SPDR Barclays. In addition to that, FlexShares Credit is 6.14 times more volatile than SPDR Barclays Short. It trades about 0.02 of its total potential returns per unit of risk. SPDR Barclays Short is currently generating about 0.16 per unit of volatility. If you would invest 2,701 in SPDR Barclays Short on August 24, 2024 and sell it today you would earn a total of 290.00 from holding SPDR Barclays Short or generate 10.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FlexShares Credit Scored Long vs. SPDR Barclays Short
Performance |
| Timeline |
| FlexShares Credit |
| SPDR Barclays Short |
FlexShares Credit and SPDR Barclays Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FlexShares Credit and SPDR Barclays
The main advantage of trading using opposite FlexShares Credit and SPDR Barclays positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FlexShares Credit position performs unexpectedly, SPDR Barclays 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 SPDR Barclays will offset losses from the drop in SPDR Barclays' 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 |
| SPDR Barclays vs. SPDR Barclays Intermediate | SPDR Barclays vs. Western Asset Short | SPDR Barclays vs. SPDR Barclays Short | SPDR Barclays vs. iShares 1 5 Year |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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