Correlation Between IShares Broad and FlexShares Credit
Can any of the company-specific risk be diversified away by investing in both IShares Broad and FlexShares Credit 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 IShares Broad and FlexShares Credit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Broad USD and FlexShares Credit Scored Corporate, you can compare the effects of market volatilities on IShares Broad and FlexShares Credit 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 IShares Broad with a short position of FlexShares Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Broad and FlexShares Credit.
Diversification Opportunities for IShares Broad and FlexShares Credit
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and FlexShares is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding iShares Broad USD and FlexShares Credit Scored Corpo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShares Credit and IShares Broad 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 iShares Broad USD are associated (or correlated) with FlexShares Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShares Credit has no effect on the direction of IShares Broad i.e., IShares Broad and FlexShares Credit go up and down completely randomly.
Pair Corralation between IShares Broad and FlexShares Credit
Given the investment horizon of 90 days IShares Broad is expected to generate 1.06 times less return on investment than FlexShares Credit. In addition to that, IShares Broad is 1.49 times more volatile than FlexShares Credit Scored Corporate. It trades about 0.05 of its total potential returns per unit of risk. FlexShares Credit Scored Corporate is currently generating about 0.08 per unit of volatility. If you would invest 4,338 in FlexShares Credit Scored Corporate on August 28, 2024 and sell it today you would earn a total of 483.00 from holding FlexShares Credit Scored Corporate or generate 11.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Broad USD vs. FlexShares Credit Scored Corpo
Performance |
| Timeline |
| iShares Broad USD |
| FlexShares Credit |
IShares Broad and FlexShares Credit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Broad and FlexShares Credit
The main advantage of trading using opposite IShares Broad and FlexShares Credit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Broad position performs unexpectedly, FlexShares Credit 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 Credit will offset losses from the drop in FlexShares Credit's long position.| IShares Broad vs. iShares 5 10 Year | IShares Broad vs. iShares Broad USD | IShares Broad vs. iShares 1 5 Year | IShares Broad vs. iShares 0 5 Year |
| FlexShares Credit vs. Senstar Technologies | FlexShares Credit vs. ImmuCell | FlexShares Credit vs. Anika Therapeutics | FlexShares Credit vs. Aquagold International |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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