Correlation Between NYSE Composite and FlexShares ESG
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and FlexShares ESG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and FlexShares ESG Climate, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of FlexShares ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and FlexShares ESG.
Diversification Opportunities for NYSE Composite and FlexShares ESG
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NYSE and FlexShares is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite 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 NYSE Composite 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 NYSE Composite 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 NYSE Composite i.e., NYSE Composite and FlexShares ESG go up and down completely randomly.
Pair Corralation between NYSE Composite and FlexShares ESG
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.62 times more return on investment than FlexShares ESG. However, NYSE Composite is 1.62 times more volatile than FlexShares ESG Climate. It trades about 0.08 of its potential returns per unit of risk. FlexShares ESG Climate is currently generating about 0.04 per unit of risk. If you would invest 1,547,479 in NYSE Composite on August 26, 2024 and sell it today you would earn a total of 464,866 from holding NYSE Composite or generate 30.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. FlexShares ESG Climate
Performance |
| Timeline |
NYSE Composite and FlexShares ESG Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
FlexShares ESG Climate
Pair trading matchups for FlexShares ESG
Pair Trading with NYSE Composite and FlexShares ESG
The main advantage of trading using opposite NYSE Composite and FlexShares ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Glacier Bancorp | NYSE Composite vs. LithiumBank Resources Corp | NYSE Composite vs. Stepstone Group | NYSE Composite vs. Pintec Technology Holdings |
| FlexShares ESG vs. iShares ESG Advanced | FlexShares ESG vs. FlexShares ESG Climate | FlexShares ESG vs. FlexShares ESG Climate | FlexShares ESG vs. Franklin Liberty Investment |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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