Correlation Between FTSE Global and Flexshares Global

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Can any of the company-specific risk be diversified away by investing in both FTSE Global and Flexshares Global 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 FTSE Global and Flexshares Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FTSE Global Infra and Flexshares Global Broad, you can compare the effects of market volatilities on FTSE Global and Flexshares Global 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 FTSE Global with a short position of Flexshares Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of FTSE Global and Flexshares Global.

Diversification Opportunities for FTSE Global and Flexshares Global

  Correlation Coefficient

Almost no diversification

The 3 months correlation between FTSE Global and Flexshares is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding FTSE Global Infra and Flexshares Global Broad in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flexshares Global Broad and FTSE Global 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 FTSE Global Infra are associated (or correlated) with Flexshares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flexshares Global Broad has no effect on the direction of FTSE Global i.e., FTSE Global and Flexshares Global go up and down completely randomly.

Pair Corralation between FTSE Global and Flexshares Global

Considering the 90-day investment horizon FTSE Global Infra is expected to under-perform the Flexshares Global. In addition to that, FTSE Global is 1.06 times more volatile than Flexshares Global Broad. It trades about -0.18 of its total potential returns per unit of risk. Flexshares Global Broad is currently generating about -0.19 per unit of volatility. If you would invest  5,090  in Flexshares Global Broad on July 7, 2022 and sell it today you would lose (359.00)  from holding Flexshares Global Broad or give up 7.05% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
ValuesDaily Returns

FTSE Global Infra  vs.  Flexshares Global Broad

 Performance (%) 
FTSE Global Infra 
FTSE Global Performance
0 of 100
Over the last 90 days FTSE Global Infra has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, FTSE Global is not utilizing all of its potentials. The new stock price disturbance, may contribute to mid-run losses for the stockholders.

FTSE Global Price Channel

Flexshares Global Broad 
Flexshares Performance
0 of 100
Over the last 90 days Flexshares Global Broad has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest sluggish performance, the Etf's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Flexshares Price Channel

FTSE Global and Flexshares Global Volatility Contrast

   Predicted Return Density   

Pair Trading with FTSE Global and Flexshares Global

The main advantage of trading using opposite FTSE Global and Flexshares Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FTSE Global position performs unexpectedly, Flexshares Global 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 Global will offset losses from the drop in Flexshares Global's long position.
FTSE Global vs. 3M Company
The idea behind FTSE Global Infra and Flexshares Global Broad 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.
Flexshares Global vs. 3M Company
Check out your portfolio center. 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 Watchlist Optimization module to optimize watchlists to build efficient portfolio or rebalance existing positions based on mean-variance optimization algorithm.

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