Correlation Between T Rex and FlexShares Credit

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

By analyzing existing cross correlation between T Rex 2X Long and FlexShares Credit Scored Corporate, you can compare the effects of market volatilities on T Rex and FlexShares Credit 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 T Rex with a short position of FlexShares Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of T Rex and FlexShares Credit.

Diversification Opportunities for T Rex and FlexShares Credit

-0.8

Correlation Coefficient

T Rex  FlexShares Credit

Pay attention - limited upside

The 3 months correlation between NVDX and FlexShares is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding T Rex 2X Long and FlexShares Credit Scored Corpo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShares Credit and T Rex 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 T Rex 2X Long are associated (or correlated) with FlexShares Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShares Credit has no effect on the direction of T Rex i.e., T Rex and FlexShares Credit go up and down completely randomly.

Pair Corralation between T Rex and FlexShares Credit

Given the investment horizon of 90 days T Rex 2X Long is expected to generate 23.54 times more return on investment than FlexShares Credit. However, T Rex is 23.54 times more volatile than FlexShares Credit Scored Corporate. It trades about 0.09 of its potential returns per unit of risk. FlexShares Credit Scored Corporate is currently generating about -0.06 per unit of risk. If you would invest  1,320  in T Rex 2X Long on September 15, 2024 and sell it today you would earn a total of  303.00  from holding T Rex 2X Long or generate 22.95% return on investment over 90 days.

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

T Rex 2X Long  vs.  FlexShares Credit Scored Corpo

T Rex 2X

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in T Rex 2X Long are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, T Rex showed solid returns over the last few months and may actually be approaching a breakup point.

FlexShares Credit

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FlexShares Credit Scored Corporate 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 latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with T Rex and FlexShares Credit

The main advantage of trading using opposite T Rex and FlexShares Credit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T Rex position performs unexpectedly, FlexShares Credit 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 Credit will offset losses from the drop in FlexShares Credit's long position.

The idea behind T Rex 2X Long and FlexShares Credit Scored 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.