Correlation Between SPDR Portfolio and FlexShares STOXX
Can any of the company-specific risk be diversified away by investing in both SPDR Portfolio and FlexShares STOXX 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 STOXX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Portfolio MSCI and FlexShares STOXX Global, you can compare the effects of market volatilities on SPDR Portfolio and FlexShares STOXX 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 STOXX. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Portfolio and FlexShares STOXX.
Diversification Opportunities for SPDR Portfolio and FlexShares STOXX
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SPDR and FlexShares is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Portfolio MSCI and FlexShares STOXX Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShares STOXX Global 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 MSCI are associated (or correlated) with FlexShares STOXX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShares STOXX Global has no effect on the direction of SPDR Portfolio i.e., SPDR Portfolio and FlexShares STOXX go up and down completely randomly.
Pair Corralation between SPDR Portfolio and FlexShares STOXX
Given the investment horizon of 90 days SPDR Portfolio is expected to generate 1.72 times less return on investment than FlexShares STOXX. In addition to that, SPDR Portfolio is 1.28 times more volatile than FlexShares STOXX Global. It trades about 0.18 of its total potential returns per unit of risk. FlexShares STOXX Global is currently generating about 0.39 per unit of volatility. If you would invest 17,333 in FlexShares STOXX Global on November 22, 2024 and sell it today you would earn a total of 689.00 from holding FlexShares STOXX Global or generate 3.98% 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 MSCI vs. FlexShares STOXX Global
Performance |
| Timeline |
| SPDR Portfolio MSCI |
| FlexShares STOXX Global |
SPDR Portfolio and FlexShares STOXX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Portfolio and FlexShares STOXX
The main advantage of trading using opposite SPDR Portfolio and FlexShares STOXX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Portfolio position performs unexpectedly, FlexShares STOXX 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 STOXX will offset losses from the drop in FlexShares STOXX's long position.| SPDR Portfolio vs. SPDR Portfolio Europe | SPDR Portfolio vs. SPDR Portfolio Corporate | SPDR Portfolio vs. SPDR Portfolio Intermediate | SPDR Portfolio vs. SPDR MSCI EAFE |
| FlexShares STOXX vs. FlexShares Quality Large | FlexShares STOXX vs. FlexShares Disciplined Duration | FlexShares STOXX vs. FlexShares Real Assets | FlexShares STOXX vs. First Trust Developed |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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