Correlation Between FlexShares IBoxx and SPDR SSgA
Can any of the company-specific risk be diversified away by investing in both FlexShares IBoxx and SPDR SSgA 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 SPDR SSgA 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 SPDR SSgA Ultra, you can compare the effects of market volatilities on FlexShares IBoxx and SPDR SSgA 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 SPDR SSgA. Check out your portfolio center. Please also check ongoing floating volatility patterns of FlexShares IBoxx and SPDR SSgA.
Diversification Opportunities for FlexShares IBoxx and SPDR SSgA
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between FlexShares and SPDR is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding FlexShares iBoxx 5 Year and SPDR SSgA Ultra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SSgA Ultra 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 SPDR SSgA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SSgA Ultra has no effect on the direction of FlexShares IBoxx i.e., FlexShares IBoxx and SPDR SSgA go up and down completely randomly.
Pair Corralation between FlexShares IBoxx and SPDR SSgA
Given the investment horizon of 90 days FlexShares iBoxx 5 Year is expected to generate 5.28 times more return on investment than SPDR SSgA. However, FlexShares IBoxx is 5.28 times more volatile than SPDR SSgA Ultra. It trades about 0.22 of its potential returns per unit of risk. SPDR SSgA Ultra is currently generating about 0.39 per unit of risk. If you would invest 2,328 in FlexShares iBoxx 5 Year on November 3, 2024 and sell it today you would earn a total of 25.00 from holding FlexShares iBoxx 5 Year or generate 1.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
FlexShares iBoxx 5 Year vs. SPDR SSgA Ultra
Performance |
| Timeline |
| FlexShares iBoxx 5 |
| SPDR SSgA Ultra |
FlexShares IBoxx and SPDR SSgA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FlexShares IBoxx and SPDR SSgA
The main advantage of trading using opposite FlexShares IBoxx and SPDR SSgA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FlexShares IBoxx position performs unexpectedly, SPDR SSgA 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 SPDR SSgA will offset losses from the drop in SPDR SSgA's long position.| FlexShares IBoxx vs. Vanguard Short Term Inflation Protected | FlexShares IBoxx vs. iShares TIPS Bond | FlexShares IBoxx vs. Invesco PureBeta 0 5 | FlexShares IBoxx vs. Goldman Sachs Access |
| SPDR SSgA vs. SPDR Bloomberg Investment | SPDR SSgA vs. SPDR Bloomberg 1 10 | SPDR SSgA vs. iShares Short Maturity | SPDR SSgA vs. Invesco Ultra Short |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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