Correlation Between FlexShares Credit and WisdomTree Short

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

By analyzing existing cross correlation between FlexShares Credit Scored Long and WisdomTree Short Term Corporate, you can compare the effects of market volatilities on FlexShares Credit and WisdomTree Short 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 Credit with a short position of WisdomTree Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of FlexShares Credit and WisdomTree Short.

Diversification Opportunities for FlexShares Credit and WisdomTree Short

-0.05

Correlation Coefficient

FlexShares Credit  WisdomTree Short

Good diversification

The 3 months correlation between FlexShares and WisdomTree is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding FlexShares Credit Scored Long and WisdomTree Short Term Corporat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Short Term and FlexShares Credit 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 Credit Scored Long are associated (or correlated) with WisdomTree Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Short Term has no effect on the direction of FlexShares Credit i.e., FlexShares Credit and WisdomTree Short go up and down completely randomly.

Pair Corralation between FlexShares Credit and WisdomTree Short

If you would invest  4,842  in WisdomTree Short Term Corporate on September 17, 2024 and sell it today you would earn a total of  0.00  from holding WisdomTree Short Term Corporate or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.54%
Values	Daily Returns

FlexShares Credit Scored Long  vs.  WisdomTree Short Term Corporat

FlexShares Credit

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FlexShares Credit Scored Long has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, FlexShares Credit is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

WisdomTree Short Term

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with FlexShares Credit and WisdomTree Short

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

The idea behind FlexShares Credit Scored Long and WisdomTree Short Term Corporate 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 Stocks Directory module to find actively traded stocks across global markets.