Correlation Between IShares Global and FlexShares Global
Can any of the company-specific risk be diversified away by investing in both IShares Global and FlexShares Global 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 IShares Global and FlexShares Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Global REIT and FlexShares Global Quality, you can compare the effects of market volatilities on IShares Global and FlexShares Global 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 IShares Global with a short position of FlexShares Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Global and FlexShares Global.
Diversification Opportunities for IShares Global and FlexShares Global
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and FlexShares is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding iShares Global REIT and FlexShares Global Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShares Global Quality and IShares Global 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 iShares Global REIT are associated (or correlated) with FlexShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShares Global Quality has no effect on the direction of IShares Global i.e., IShares Global and FlexShares Global go up and down completely randomly.
Pair Corralation between IShares Global and FlexShares Global
Given the investment horizon of 90 days iShares Global REIT is expected to under-perform the FlexShares Global. In addition to that, IShares Global is 1.06 times more volatile than FlexShares Global Quality. It trades about -0.01 of its total potential returns per unit of risk. FlexShares Global Quality is currently generating about -0.01 per unit of volatility. If you would invest 5,932 in FlexShares Global Quality on November 28, 2024 and sell it today you would lose (57.00) from holding FlexShares Global Quality or give up 0.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Global REIT vs. FlexShares Global Quality
Performance |
| Timeline |
| iShares Global REIT |
| FlexShares Global Quality |
IShares Global and FlexShares Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Global and FlexShares Global
The main advantage of trading using opposite IShares Global and FlexShares Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Global position performs unexpectedly, FlexShares Global 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 Global will offset losses from the drop in FlexShares Global's long position.| IShares Global vs. iShares Core REIT | IShares Global vs. Schwab REIT ETF | IShares Global vs. Global X SuperDividend | IShares Global vs. Fidelity MSCI Real |
| FlexShares Global vs. FlexShares International Quality | FlexShares Global vs. FlexShares International Quality | FlexShares Global vs. FlexShares Quality Dividend | FlexShares Global vs. First Trust SP |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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