Correlation Between FlexShares Real and FlexShares Credit
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 Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 95.24% |
Values | Daily Returns |
FlexShares Real Assets vs. FlexShares Credit Scored Long
Performance |
Timeline |
FlexShares Real Assets |
FlexShares Credit |
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.FlexShares Real vs. Simplify Bitcoin Strategy | FlexShares Real vs. iShares Emergent Food | FlexShares Real vs. Aquagold International | FlexShares Real vs. Morningstar Unconstrained Allocation |
FlexShares Credit vs. SPDR Barclays Long | FlexShares Credit vs. FlexShares Credit Scored Corporate | FlexShares Credit vs. FlexShares Disciplined Duration | FlexShares Credit vs. FlexShares Quality Large |
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..
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