Correlation Between Roundhill Magnificent and FlexShares ESG
Can any of the company-specific risk be diversified away by investing in both Roundhill Magnificent and FlexShares 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 Roundhill Magnificent and FlexShares ESG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Roundhill Magnificent Seven and FlexShares ESG Climate, you can compare the effects of market volatilities on Roundhill Magnificent and FlexShares 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 Roundhill Magnificent with a short position of FlexShares ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roundhill Magnificent and FlexShares ESG.
Diversification Opportunities for Roundhill Magnificent and FlexShares ESG
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Roundhill and FlexShares is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Roundhill Magnificent Seven and FlexShares ESG Climate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShares ESG Climate and Roundhill Magnificent 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 Roundhill Magnificent Seven are associated (or correlated) with FlexShares ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShares ESG Climate has no effect on the direction of Roundhill Magnificent i.e., Roundhill Magnificent and FlexShares ESG go up and down completely randomly.
Pair Corralation between Roundhill Magnificent and FlexShares ESG
Given the investment horizon of 90 days Roundhill Magnificent Seven is expected to generate 1.99 times more return on investment than FlexShares ESG. However, Roundhill Magnificent is 1.99 times more volatile than FlexShares ESG Climate. It trades about 0.1 of its potential returns per unit of risk. FlexShares ESG Climate is currently generating about 0.0 per unit of risk. If you would invest 4,188 in Roundhill Magnificent Seven on September 1, 2024 and sell it today you would earn a total of 912.00 from holding Roundhill Magnificent Seven or generate 21.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Roundhill Magnificent Seven vs. FlexShares ESG Climate
Performance |
| Timeline |
| Roundhill Magnificent |
| FlexShares ESG Climate |
Roundhill Magnificent and FlexShares ESG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Roundhill Magnificent and FlexShares ESG
The main advantage of trading using opposite Roundhill Magnificent and FlexShares ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roundhill Magnificent position performs unexpectedly, FlexShares 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 FlexShares ESG will offset losses from the drop in FlexShares ESG's long position.| Roundhill Magnificent vs. Robo Global Robotics | Roundhill Magnificent vs. Bitwise Funds Trust | Roundhill Magnificent vs. FT Vest Equity | Roundhill Magnificent vs. Zillow Group Class |
| FlexShares ESG vs. iShares ESG Aggregate | FlexShares ESG vs. SPDR MSCI Emerging | FlexShares ESG vs. Aquagold International | FlexShares ESG vs. Thrivent High Yield |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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