Correlation Between AdvisorShares and FlexShares IBoxx
Can any of the company-specific risk be diversified away by investing in both AdvisorShares and FlexShares IBoxx 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 AdvisorShares and FlexShares IBoxx into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AdvisorShares and FlexShares iBoxx 5 Year, you can compare the effects of market volatilities on AdvisorShares and FlexShares IBoxx 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 AdvisorShares with a short position of FlexShares IBoxx. Check out your portfolio center. Please also check ongoing floating volatility patterns of AdvisorShares and FlexShares IBoxx.
Diversification Opportunities for AdvisorShares and FlexShares IBoxx
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AdvisorShares and FlexShares is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding AdvisorShares and FlexShares iBoxx 5 Year in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShares iBoxx 5 and AdvisorShares 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 AdvisorShares are associated (or correlated) with FlexShares IBoxx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShares iBoxx 5 has no effect on the direction of AdvisorShares i.e., AdvisorShares and FlexShares IBoxx go up and down completely randomly.
Pair Corralation between AdvisorShares and FlexShares IBoxx
Given the investment horizon of 90 days AdvisorShares is expected to generate 0.46 times more return on investment than FlexShares IBoxx. However, AdvisorShares is 2.19 times less risky than FlexShares IBoxx. It trades about 0.19 of its potential returns per unit of risk. FlexShares iBoxx 5 Year is currently generating about 0.05 per unit of risk. If you would invest 4,454 in AdvisorShares on August 31, 2024 and sell it today you would earn a total of 38.00 from holding AdvisorShares or generate 0.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 8.56% |
| Values | Daily Returns |
AdvisorShares vs. FlexShares iBoxx 5 Year
Performance |
| Timeline |
| AdvisorShares |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| FlexShares iBoxx 5 |
AdvisorShares and FlexShares IBoxx Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AdvisorShares and FlexShares IBoxx
The main advantage of trading using opposite AdvisorShares and FlexShares IBoxx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AdvisorShares position performs unexpectedly, FlexShares IBoxx 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 IBoxx will offset losses from the drop in FlexShares IBoxx's long position.| AdvisorShares vs. Vanguard Intermediate Term Corporate | AdvisorShares vs. Vanguard Short Term Bond | AdvisorShares vs. Vanguard Long Term Corporate | AdvisorShares vs. Vanguard Short Term Treasury |
| FlexShares IBoxx vs. Vanguard Short Term Inflation Protected | FlexShares IBoxx vs. iShares TIPS Bond | FlexShares IBoxx vs. Invesco PureBeta 0 5 | FlexShares IBoxx vs. Goldman Sachs Access |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
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| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
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| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |