Correlation Between Ionic Inflation and FlexShares IBoxx

Can any of the company-specific risk be diversified away by investing in both Ionic Inflation 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 Ionic Inflation and FlexShares IBoxx into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ionic Inflation Protection and FlexShares iBoxx 5 Year, you can compare the effects of market volatilities on Ionic Inflation 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 Ionic Inflation with a short position of FlexShares IBoxx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ionic Inflation and FlexShares IBoxx.

Diversification Opportunities for Ionic Inflation and FlexShares IBoxx

-0.9

Correlation Coefficient

Ionic Inflation  FlexShares IBoxx

Pay attention - limited upside

The 3 months correlation between Ionic and FlexShares is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Ionic Inflation Protection 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 Ionic Inflation 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 Ionic Inflation Protection 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 Ionic Inflation i.e., Ionic Inflation and FlexShares IBoxx go up and down completely randomly.

Pair Corralation between Ionic Inflation and FlexShares IBoxx

Given the investment horizon of 90 days Ionic Inflation Protection is expected to generate 1.52 times more return on investment than FlexShares IBoxx. However, Ionic Inflation is 1.52 times more volatile than FlexShares iBoxx 5 Year. It trades about 0.06 of its potential returns per unit of risk. FlexShares iBoxx 5 Year is currently generating about 0.04 per unit of risk. If you would invest  1,853  in Ionic Inflation Protection on September 25, 2024 and sell it today you would earn a total of  112.40  from holding Ionic Inflation Protection or generate 6.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Ionic Inflation Protection  vs.  FlexShares iBoxx 5 Year

Ionic Inflation Prot

Risk-Adjusted Performance

12 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ionic Inflation Protection are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, Ionic Inflation is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

FlexShares iBoxx 5

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FlexShares iBoxx 5 Year has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, FlexShares IBoxx is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Ionic Inflation and FlexShares IBoxx

The main advantage of trading using opposite Ionic Inflation and FlexShares IBoxx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ionic Inflation 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.

The idea behind Ionic Inflation Protection and FlexShares iBoxx 5 Year 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.

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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.