Correlation Between IVH and FlexShares Developed

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

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

Diversification Opportunities for IVH and FlexShares Developed

0.0

Correlation Coefficient

IVH  FlexShares Developed

Pay attention - limited upside

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

Pair Corralation between IVH and FlexShares Developed

If you would invest  2,634  in FlexShares Developed Markets on December 29, 2024 and sell it today you would earn a total of  249.00  from holding FlexShares Developed Markets or generate 9.45% return on investment over 90 days.

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

IVH  vs.  FlexShares Developed Markets

IVH

Risk-Adjusted Performance

Very Weak

Over the last 90 days IVH has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, IVH is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

FlexShares Developed

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FlexShares Developed Markets are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, FlexShares Developed may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with IVH and FlexShares Developed

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

The idea behind IVH and FlexShares Developed Markets 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.