Correlation Between FlexShares IBoxx and FlexShares IBoxx
Can any of the company-specific risk be diversified away by investing in both FlexShares IBoxx and FlexShares IBoxx 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 FlexShares IBoxx 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 FlexShares iBoxx 5 Year, you can compare the effects of market volatilities on FlexShares IBoxx and FlexShares IBoxx 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 FlexShares IBoxx. Check out your portfolio center. Please also check ongoing floating volatility patterns of FlexShares IBoxx and FlexShares IBoxx.
Diversification Opportunities for FlexShares IBoxx and FlexShares IBoxx
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FlexShares and FlexShares is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding FlexShares iBoxx 3 Year and FlexShares iBoxx 5 Year in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShares iBoxx 5 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 FlexShares IBoxx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShares iBoxx 5 has no effect on the direction of FlexShares IBoxx i.e., FlexShares IBoxx and FlexShares IBoxx go up and down completely randomly.
Pair Corralation between FlexShares IBoxx and FlexShares IBoxx
Given the investment horizon of 90 days FlexShares iBoxx 3 Year is expected to generate 0.58 times more return on investment than FlexShares IBoxx. However, FlexShares iBoxx 3 Year is 1.71 times less risky than FlexShares IBoxx. It trades about 0.1 of its potential returns per unit of risk. FlexShares iBoxx 5 Year is currently generating about 0.0 per unit of risk. If you would invest 2,363 in FlexShares iBoxx 3 Year on October 20, 2024 and sell it today you would earn a total of 13.00 from holding FlexShares iBoxx 3 Year or generate 0.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FlexShares iBoxx 3 Year vs. FlexShares iBoxx 5 Year
Performance |
| Timeline |
| FlexShares iBoxx 3 |
| FlexShares iBoxx 5 |
FlexShares IBoxx and FlexShares IBoxx Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FlexShares IBoxx and FlexShares IBoxx
The main advantage of trading using opposite FlexShares IBoxx and FlexShares IBoxx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FlexShares IBoxx position performs unexpectedly, FlexShares IBoxx 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 IBoxx will offset losses from the drop in FlexShares IBoxx's 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 |
| 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 |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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