Correlation Between FlexShares Real and FlexShares Credit

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both FlexShares Real 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 FlexShares Real and FlexShares Credit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FlexShares Real Assets and FlexShares Credit Scored Long, you can compare the effects of market volatilities on FlexShares Real 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 FlexShares Real with a short position of FlexShares Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of FlexShares Real and FlexShares Credit.

Diversification Opportunities for FlexShares Real and FlexShares Credit

0.68
  Correlation Coefficient

Poor diversification

The 3 months correlation between FlexShares and FlexShares is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding FlexShares Real Assets and FlexShares Credit Scored Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShares Credit and FlexShares Real 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 Real Assets 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 FlexShares Real i.e., FlexShares Real and FlexShares Credit go up and down completely randomly.

Pair Corralation between FlexShares Real and FlexShares Credit

Given the investment horizon of 90 days FlexShares Real Assets is expected to under-perform the FlexShares Credit. But the etf apears to be less risky and, when comparing its historical volatility, FlexShares Real Assets is 1.32 times less risky than FlexShares Credit. The etf trades about -0.12 of its potential returns per unit of risk. The FlexShares Credit Scored Long is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  4,282  in FlexShares Credit Scored Long on September 17, 2024 and sell it today you would earn a total of  35.00  from holding FlexShares Credit Scored Long or generate 0.82% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.24%
ValuesDaily Returns

FlexShares Real Assets  vs.  FlexShares Credit Scored Long

 Performance 
       Timeline  
FlexShares Real Assets 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days FlexShares Real Assets has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, FlexShares Real is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.
FlexShares Credit 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days FlexShares Credit Scored Long has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, FlexShares Credit is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

FlexShares Real and FlexShares Credit Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with FlexShares Real and FlexShares Credit

The main advantage of trading using opposite FlexShares Real and FlexShares Credit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FlexShares Real 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.
The idea behind FlexShares Real Assets and FlexShares Credit Scored Long pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..

Other Complementary Tools

Positions Ratings
Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance
My Watchlist Analysis
Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like
Fundamentals Comparison
Compare fundamentals across multiple equities to find investing opportunities
Funds Screener
Find actively-traded funds from around the world traded on over 30 global exchanges
Portfolio Backtesting
Avoid under-diversification and over-optimization by backtesting your portfolios