Correlation Between FlexShares Global and SPDR Dow
Can any of the company-specific risk be diversified away by investing in both FlexShares Global and SPDR Dow 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 Global and SPDR Dow into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FlexShares Global Quality and SPDR Dow Jones, you can compare the effects of market volatilities on FlexShares Global and SPDR Dow 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 Global with a short position of SPDR Dow. Check out your portfolio center. Please also check ongoing floating volatility patterns of FlexShares Global and SPDR Dow.
Diversification Opportunities for FlexShares Global and SPDR Dow
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between FlexShares and SPDR is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding FlexShares Global Quality and SPDR Dow Jones in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Dow Jones and FlexShares 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 FlexShares Global Quality are associated (or correlated) with SPDR Dow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Dow Jones has no effect on the direction of FlexShares Global i.e., FlexShares Global and SPDR Dow go up and down completely randomly.
Pair Corralation between FlexShares Global and SPDR Dow
Given the investment horizon of 90 days FlexShares Global Quality is expected to generate 0.96 times more return on investment than SPDR Dow. However, FlexShares Global Quality is 1.04 times less risky than SPDR Dow. It trades about 0.04 of its potential returns per unit of risk. SPDR Dow Jones is currently generating about 0.03 per unit of risk. If you would invest 5,167 in FlexShares Global Quality on September 5, 2024 and sell it today you would earn a total of 959.00 from holding FlexShares Global Quality or generate 18.56% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
FlexShares Global Quality vs. SPDR Dow Jones
Performance |
Timeline |
FlexShares Global Quality |
SPDR Dow Jones |
FlexShares Global and SPDR Dow Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with FlexShares Global and SPDR Dow
The main advantage of trading using opposite FlexShares Global and SPDR Dow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FlexShares Global position performs unexpectedly, SPDR Dow 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 SPDR Dow will offset losses from the drop in SPDR Dow's long position.FlexShares Global vs. FlexShares International Quality | FlexShares Global vs. FlexShares International Quality | FlexShares Global vs. FlexShares Quality Dividend | FlexShares Global vs. First Trust SP |
SPDR Dow vs. SPDR Dow Jones | SPDR Dow vs. iShares International Developed | SPDR Dow vs. SPDR Dow Jones | SPDR Dow vs. SPDR SP Emerging |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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