Correlation Between R3 Global and FlexShares International

Can any of the company-specific risk be diversified away by investing in both R3 Global and FlexShares International 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 R3 Global and FlexShares International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between R3 Global and FlexShares International Quality, you can compare the effects of market volatilities on R3 Global and FlexShares International 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 R3 Global with a short position of FlexShares International. Check out your portfolio center. Please also check ongoing floating volatility patterns of R3 Global and FlexShares International.

Diversification Opportunities for R3 Global and FlexShares International

0.0

Correlation Coefficient

R3 Global  FlexShares International

Pay attention - limited upside

The 3 months correlation between GDVD and FlexShares is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding R3 Global and FlexShares International Quali in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShares International and R3 Global 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 R3 Global are associated (or correlated) with FlexShares International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShares International has no effect on the direction of R3 Global i.e., R3 Global and FlexShares International go up and down completely randomly.

Pair Corralation between R3 Global and FlexShares International

If you would invest  2,405  in FlexShares International Quality on December 5, 2024 and sell it today you would earn a total of  75.00  from holding FlexShares International Quality or generate 3.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

R3 Global  vs.  FlexShares International Quali

R3 Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days R3 Global has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, R3 Global is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

FlexShares International

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FlexShares International Quality are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, FlexShares International is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with R3 Global and FlexShares International

The main advantage of trading using opposite R3 Global and FlexShares International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if R3 Global position performs unexpectedly, FlexShares International 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 International will offset losses from the drop in FlexShares International's long position.

The idea behind R3 Global and FlexShares International Quality 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.