Correlation Between FlexShares Disciplined and FlexShares Credit
Can any of the company-specific risk be diversified away by investing in both FlexShares Disciplined and FlexShares Credit 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 FlexShares Credit 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 FlexShares Credit Scored Corporate, you can compare the effects of market volatilities on FlexShares Disciplined and FlexShares Credit 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 FlexShares Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of FlexShares Disciplined and FlexShares Credit.
Diversification Opportunities for FlexShares Disciplined and FlexShares Credit
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between FlexShares and FlexShares is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding FlexShares Disciplined Duratio and FlexShares Credit Scored Corpo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShares Credit 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 FlexShares Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShares Credit has no effect on the direction of FlexShares Disciplined i.e., FlexShares Disciplined and FlexShares Credit go up and down completely randomly.
Pair Corralation between FlexShares Disciplined and FlexShares Credit
Given the investment horizon of 90 days FlexShares Disciplined Duration is expected to generate 1.59 times more return on investment than FlexShares Credit. However, FlexShares Disciplined is 1.59 times more volatile than FlexShares Credit Scored Corporate. It trades about 0.12 of its potential returns per unit of risk. FlexShares Credit Scored Corporate is currently generating about 0.15 per unit of risk. If you would invest 2,017 in FlexShares Disciplined Duration on October 24, 2024 and sell it today you would earn a total of 14.00 from holding FlexShares Disciplined Duration or generate 0.69% 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. FlexShares Credit Scored Corpo
Performance |
| Timeline |
| FlexShares Disciplined |
| FlexShares Credit |
FlexShares Disciplined and FlexShares Credit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FlexShares Disciplined and FlexShares Credit
The main advantage of trading using opposite FlexShares Disciplined and FlexShares Credit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FlexShares Disciplined position performs unexpectedly, FlexShares Credit 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 Credit will offset losses from the drop in FlexShares Credit's long position.The idea behind FlexShares Disciplined Duration and FlexShares Credit Scored Corporate 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.
| FlexShares Credit vs. iShares ESG USD | FlexShares Credit vs. FlexShares Disciplined Duration | FlexShares Credit vs. iShares ESG 1 5 | FlexShares Credit vs. First Trust Emerging |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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