Correlation Between FlexShares Credit and IShares ESG
Can any of the company-specific risk be diversified away by investing in both FlexShares Credit and IShares ESG 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 ESG 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 ESG USD, you can compare the effects of market volatilities on FlexShares Credit and IShares ESG 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 ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of FlexShares Credit and IShares ESG.
Diversification Opportunities for FlexShares Credit and IShares ESG
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 ESG USD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares ESG USD 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 ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares ESG USD has no effect on the direction of FlexShares Credit i.e., FlexShares Credit and IShares ESG go up and down completely randomly.
Pair Corralation between FlexShares Credit and IShares ESG
Given the investment horizon of 90 days FlexShares Credit Scored Long is expected to generate 1.84 times more return on investment than IShares ESG. However, FlexShares Credit is 1.84 times more volatile than iShares ESG USD. It trades about 0.14 of its potential returns per unit of risk. iShares ESG USD is currently generating about 0.16 per unit of risk. If you would invest 4,325 in FlexShares Credit Scored Long on September 3, 2024 and sell it today you would earn a total of 101.00 from holding FlexShares Credit Scored Long or generate 2.34% 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 ESG USD
Performance |
| Timeline |
| FlexShares Credit |
| iShares ESG USD |
FlexShares Credit and IShares ESG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FlexShares Credit and IShares ESG
The main advantage of trading using opposite FlexShares Credit and IShares ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FlexShares Credit position performs unexpectedly, IShares ESG 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 ESG will offset losses from the drop in IShares ESG'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 ESG vs. iShares iBoxx High | IShares ESG vs. iShares 1 3 Year | IShares ESG vs. iShares TIPS Bond | IShares ESG vs. iShares 7 10 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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