Correlation Between FlexShares Disciplined and IShares 5
Can any of the company-specific risk be diversified away by investing in both FlexShares Disciplined and IShares 5 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 Disciplined and IShares 5 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FlexShares Disciplined Duration and iShares 5 10 Year, you can compare the effects of market volatilities on FlexShares Disciplined and IShares 5 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 Disciplined with a short position of IShares 5. Check out your portfolio center. Please also check ongoing floating volatility patterns of FlexShares Disciplined and IShares 5.
Diversification Opportunities for FlexShares Disciplined and IShares 5
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between FlexShares and IShares is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding FlexShares Disciplined Duratio and iShares 5 10 Year in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares 5 10 and FlexShares Disciplined 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 Disciplined Duration are associated (or correlated) with IShares 5. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares 5 10 has no effect on the direction of FlexShares Disciplined i.e., FlexShares Disciplined and IShares 5 go up and down completely randomly.
Pair Corralation between FlexShares Disciplined and IShares 5
Given the investment horizon of 90 days FlexShares Disciplined is expected to generate 1.76 times less return on investment than IShares 5. But when comparing it to its historical volatility, FlexShares Disciplined Duration is 1.1 times less risky than IShares 5. It trades about 0.04 of its potential returns per unit of risk. iShares 5 10 Year is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 4,652 in iShares 5 10 Year on September 2, 2024 and sell it today you would earn a total of 621.00 from holding iShares 5 10 Year or generate 13.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
FlexShares Disciplined Duratio vs. iShares 5 10 Year
Performance |
| Timeline |
| FlexShares Disciplined |
| iShares 5 10 |
FlexShares Disciplined and IShares 5 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FlexShares Disciplined and IShares 5
The main advantage of trading using opposite FlexShares Disciplined and IShares 5 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FlexShares Disciplined position performs unexpectedly, IShares 5 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 5 will offset losses from the drop in IShares 5's long position.The idea behind FlexShares Disciplined Duration and iShares 5 10 Year pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| IShares 5 vs. iShares 1 5 Year | IShares 5 vs. iShares Broad USD | IShares 5 vs. iShares 10 Year | IShares 5 vs. SPDR Barclays Intermediate |
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.
Other Complementary Tools
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Stocks Directory Find actively traded stocks across global markets | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences |