Correlation Between FlexShares Ready and SPDR DoubleLine

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

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

Diversification Opportunities for FlexShares Ready and SPDR DoubleLine

-0.67

Correlation Coefficient

FlexShares Ready  SPDR DoubleLine

Excellent diversification

The 3 months correlation between FlexShares and SPDR is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding FlexShares Ready Access and SPDR DoubleLine Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR DoubleLine Total and FlexShares Ready 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 Ready Access are associated (or correlated) with SPDR DoubleLine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR DoubleLine Total has no effect on the direction of FlexShares Ready i.e., FlexShares Ready and SPDR DoubleLine go up and down completely randomly.

Pair Corralation between FlexShares Ready and SPDR DoubleLine

Given the investment horizon of 90 days FlexShares Ready Access is expected to generate 0.1 times more return on investment than SPDR DoubleLine. However, FlexShares Ready Access is 10.08 times less risky than SPDR DoubleLine. It trades about 0.63 of its potential returns per unit of risk. SPDR DoubleLine Total is currently generating about -0.12 per unit of risk. If you would invest  7,450  in FlexShares Ready Access on September 13, 2024 and sell it today you would earn a total of  83.00  from holding FlexShares Ready Access or generate 1.11% return on investment over 90 days.

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

FlexShares Ready Access  vs.  SPDR DoubleLine Total

FlexShares Ready Access

Risk-Adjusted Performance

49 of 100

Excellent

Compared to the overall equity markets, risk-adjusted returns on investments in FlexShares Ready Access are ranked lower than 49 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, FlexShares Ready is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

SPDR DoubleLine Total

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPDR DoubleLine Total has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, SPDR DoubleLine is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with FlexShares Ready and SPDR DoubleLine

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

The idea behind FlexShares Ready Access and SPDR DoubleLine Total 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.