Correlation Between IQ Candriam and FlexShares STOXX

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

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

Diversification Opportunities for IQ Candriam and FlexShares STOXX

0.12

Correlation Coefficient

IQ Candriam  FlexShares STOXX

Average diversification

The 3 months correlation between IQSI and FlexShares is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding IQ Candriam ESG and FlexShares STOXX ESG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShares STOXX ESG and IQ Candriam 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 IQ Candriam ESG are associated (or correlated) with FlexShares STOXX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShares STOXX ESG has no effect on the direction of IQ Candriam i.e., IQ Candriam and FlexShares STOXX go up and down completely randomly.

Pair Corralation between IQ Candriam and FlexShares STOXX

Given the investment horizon of 90 days IQ Candriam ESG is expected to generate 0.94 times more return on investment than FlexShares STOXX. However, IQ Candriam ESG is 1.06 times less risky than FlexShares STOXX. It trades about 0.19 of its potential returns per unit of risk. FlexShares STOXX ESG is currently generating about -0.05 per unit of risk. If you would invest  2,855  in IQ Candriam ESG on December 19, 2024 and sell it today you would earn a total of  272.00  from holding IQ Candriam ESG or generate 9.53% return on investment over 90 days.

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

IQ Candriam ESG  vs.  FlexShares STOXX ESG

IQ Candriam ESG

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in IQ Candriam ESG are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, IQ Candriam may actually be approaching a critical reversion point that can send shares even higher in April 2025.

FlexShares STOXX ESG

Risk-Adjusted Performance

Very Weak

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

Pair Trading with IQ Candriam and FlexShares STOXX

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

The idea behind IQ Candriam ESG and FlexShares STOXX ESG 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.