Correlation Between FlexShares Credit and WisdomTree Corporate
Can any of the company-specific risk be diversified away by investing in both FlexShares Credit and WisdomTree Corporate 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 WisdomTree Corporate 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 WisdomTree Corporate Bond, you can compare the effects of market volatilities on FlexShares Credit and WisdomTree Corporate 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 WisdomTree Corporate. Check out your portfolio center. Please also check ongoing floating volatility patterns of FlexShares Credit and WisdomTree Corporate.
Diversification Opportunities for FlexShares Credit and WisdomTree Corporate
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between FlexShares and WisdomTree is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding FlexShares Credit Scored Long and WisdomTree Corporate Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Corporate Bond 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 WisdomTree Corporate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Corporate Bond has no effect on the direction of FlexShares Credit i.e., FlexShares Credit and WisdomTree Corporate go up and down completely randomly.
Pair Corralation between FlexShares Credit and WisdomTree Corporate
Given the investment horizon of 90 days FlexShares Credit is expected to generate 1.24 times less return on investment than WisdomTree Corporate. In addition to that, FlexShares Credit is 1.78 times more volatile than WisdomTree Corporate Bond. It trades about 0.02 of its total potential returns per unit of risk. WisdomTree Corporate Bond is currently generating about 0.05 per unit of volatility. If you would invest 4,126 in WisdomTree Corporate Bond on August 24, 2024 and sell it today you would earn a total of 382.00 from holding WisdomTree Corporate Bond or generate 9.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 84.48% |
| Values | Daily Returns |
FlexShares Credit Scored Long vs. WisdomTree Corporate Bond
Performance |
| Timeline |
| FlexShares Credit |
| WisdomTree Corporate Bond |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
FlexShares Credit and WisdomTree Corporate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FlexShares Credit and WisdomTree Corporate
The main advantage of trading using opposite FlexShares Credit and WisdomTree Corporate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FlexShares Credit position performs unexpectedly, WisdomTree Corporate 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 WisdomTree Corporate will offset losses from the drop in WisdomTree Corporate'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 |
| WisdomTree Corporate vs. WisdomTree Yield Enhanced | WisdomTree Corporate vs. iShares Edge Investment | WisdomTree Corporate vs. FlexShares Credit Scored Long |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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