Correlation Between FlexShares IBoxx and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both FlexShares IBoxx and Goldman Sachs 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 Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FlexShares iBoxx 3 Year and Goldman Sachs Access, you can compare the effects of market volatilities on FlexShares IBoxx and Goldman Sachs 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 Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of FlexShares IBoxx and Goldman Sachs.
Diversification Opportunities for FlexShares IBoxx and Goldman Sachs
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between FlexShares and Goldman is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding FlexShares iBoxx 3 Year and Goldman Sachs Access in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Access 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 3 Year are associated (or correlated) with Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs Access has no effect on the direction of FlexShares IBoxx i.e., FlexShares IBoxx and Goldman Sachs go up and down completely randomly.
Pair Corralation between FlexShares IBoxx and Goldman Sachs
Given the investment horizon of 90 days FlexShares iBoxx 3 Year is expected to generate 0.46 times more return on investment than Goldman Sachs. However, FlexShares iBoxx 3 Year is 2.2 times less risky than Goldman Sachs. It trades about 0.18 of its potential returns per unit of risk. Goldman Sachs Access is currently generating about 0.04 per unit of risk. If you would invest 2,371 in FlexShares iBoxx 3 Year on August 30, 2024 and sell it today you would earn a total of 11.00 from holding FlexShares iBoxx 3 Year or generate 0.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
FlexShares iBoxx 3 Year vs. Goldman Sachs Access
Performance |
| Timeline |
| FlexShares iBoxx 3 |
| Goldman Sachs Access |
FlexShares IBoxx and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FlexShares IBoxx and Goldman Sachs
The main advantage of trading using opposite FlexShares IBoxx and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FlexShares IBoxx position performs unexpectedly, Goldman Sachs 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 Goldman Sachs will offset losses from the drop in Goldman Sachs' long position.| FlexShares IBoxx vs. FlexShares iBoxx 5 Year | FlexShares IBoxx vs. SPDR Bloomberg 1 10 | FlexShares IBoxx vs. PIMCO 1 5 Year | FlexShares IBoxx vs. PIMCO Broad TIPS |
| Goldman Sachs vs. SPDR Bloomberg 1 10 | Goldman Sachs vs. PIMCO Broad TIPS | Goldman Sachs vs. SPDR Portfolio TIPS | Goldman Sachs vs. FlexShares iBoxx 5 Year |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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