Correlation Between FlexShares IBoxx and Ionic Inflation
Can any of the company-specific risk be diversified away by investing in both FlexShares IBoxx and Ionic Inflation 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 FlexShares IBoxx and Ionic Inflation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FlexShares iBoxx 5 Year and Ionic Inflation Protection, you can compare the effects of market volatilities on FlexShares IBoxx and Ionic Inflation 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 FlexShares IBoxx with a short position of Ionic Inflation. Check out your portfolio center. Please also check ongoing floating volatility patterns of FlexShares IBoxx and Ionic Inflation.
Diversification Opportunities for FlexShares IBoxx and Ionic Inflation
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between FlexShares and Ionic is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding FlexShares iBoxx 5 Year and Ionic Inflation Protection in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ionic Inflation Prot and FlexShares IBoxx 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 FlexShares iBoxx 5 Year are associated (or correlated) with Ionic Inflation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ionic Inflation Prot has no effect on the direction of FlexShares IBoxx i.e., FlexShares IBoxx and Ionic Inflation go up and down completely randomly.
Pair Corralation between FlexShares IBoxx and Ionic Inflation
Given the investment horizon of 90 days FlexShares iBoxx 5 Year is expected to generate 0.84 times more return on investment than Ionic Inflation. However, FlexShares iBoxx 5 Year is 1.19 times less risky than Ionic Inflation. It trades about 0.08 of its potential returns per unit of risk. Ionic Inflation Protection is currently generating about 0.05 per unit of risk. If you would invest 2,268 in FlexShares iBoxx 5 Year on August 27, 2024 and sell it today you would earn a total of 82.00 from holding FlexShares iBoxx 5 Year or generate 3.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FlexShares iBoxx 5 Year vs. Ionic Inflation Protection
Performance |
| Timeline |
| FlexShares iBoxx 5 |
| Ionic Inflation Prot |
FlexShares IBoxx and Ionic Inflation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FlexShares IBoxx and Ionic Inflation
The main advantage of trading using opposite FlexShares IBoxx and Ionic Inflation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FlexShares IBoxx position performs unexpectedly, Ionic Inflation 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 Ionic Inflation will offset losses from the drop in Ionic Inflation's long position.| FlexShares IBoxx vs. PIMCO 1 5 Year | FlexShares IBoxx vs. SPDR Bloomberg 1 10 | FlexShares IBoxx vs. FlexShares iBoxx 3 Year |
| Ionic Inflation vs. iShares Dividend and | Ionic Inflation vs. Martin Currie Sustainable | Ionic Inflation vs. VictoryShares THB Mid | Ionic Inflation vs. Mast Global Battery |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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