Correlation Between SPDR Portfolio and FlexShares Core
Can any of the company-specific risk be diversified away by investing in both SPDR Portfolio and FlexShares Core 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 SPDR Portfolio and FlexShares Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Portfolio Aggregate and FlexShares Core Select, you can compare the effects of market volatilities on SPDR Portfolio and FlexShares Core 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 SPDR Portfolio with a short position of FlexShares Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Portfolio and FlexShares Core.
Diversification Opportunities for SPDR Portfolio and FlexShares Core
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between SPDR and FlexShares is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Portfolio Aggregate and FlexShares Core Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShares Core Select and SPDR Portfolio 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 SPDR Portfolio Aggregate are associated (or correlated) with FlexShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShares Core Select has no effect on the direction of SPDR Portfolio i.e., SPDR Portfolio and FlexShares Core go up and down completely randomly.
Pair Corralation between SPDR Portfolio and FlexShares Core
Given the investment horizon of 90 days SPDR Portfolio Aggregate is expected to generate 0.96 times more return on investment than FlexShares Core. However, SPDR Portfolio Aggregate is 1.04 times less risky than FlexShares Core. It trades about 0.04 of its potential returns per unit of risk. FlexShares Core Select is currently generating about 0.03 per unit of risk. If you would invest 2,389 in SPDR Portfolio Aggregate on September 2, 2024 and sell it today you would earn a total of 172.00 from holding SPDR Portfolio Aggregate or generate 7.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR Portfolio Aggregate vs. FlexShares Core Select
Performance |
| Timeline |
| SPDR Portfolio Aggregate |
| FlexShares Core Select |
SPDR Portfolio and FlexShares Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Portfolio and FlexShares Core
The main advantage of trading using opposite SPDR Portfolio and FlexShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Portfolio position performs unexpectedly, FlexShares Core 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 Core will offset losses from the drop in FlexShares Core's long position.| SPDR Portfolio vs. SPDR SP World | SPDR Portfolio vs. SPDR Barclays Intermediate | SPDR Portfolio vs. SPDR Portfolio SP | SPDR Portfolio vs. SPDR Portfolio Emerging |
| FlexShares Core vs. Schwab International Equity | FlexShares Core vs. Schwab Emerging Markets | FlexShares Core vs. Schwab Short Term Treasury | FlexShares Core vs. Schwab TIPS ETF |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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