Correlation Between KS MSCI and Flexshares Global

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

Diversification Opportunities for KS MSCI and Flexshares Global

0.79
  Correlation Coefficient

Poor diversification

The 3 months correlation between KS MSCI and Flexshares is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding KS MSCI One 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 KS MSCI 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 KS MSCI One 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 KS MSCI i.e., KS MSCI and Flexshares Global go up and down completely randomly.

Pair Corralation between KS MSCI and Flexshares Global

Given the investment horizon of 90 days KS MSCI One is expected to generate 1.3 times more return on investment than Flexshares Global. However, KS MSCI is 1.3 times more volatile than Flexshares Global Broad. It trades about 0.01 of its potential returns per unit of risk. Flexshares Global Broad is currently generating about -0.02 per unit of risk. If you would invest  2,182  in KS MSCI One on June 30, 2022 and sell it today you would earn a total of  79.00  from holding KS MSCI One or generate 3.62% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

KS MSCI One  vs.  Flexshares Global Broad

 Performance (%) 
       Timeline  
KS MSCI One 
KS MSCI Performance
0 of 100
Over the last 90 days KS MSCI One has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Etf's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the ETF retail investors.

KS MSCI 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 weak 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

KS MSCI and Flexshares Global Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with KS MSCI and Flexshares Global

The main advantage of trading using opposite KS MSCI and Flexshares Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KS MSCI 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.
KS MSCI vs. Verizon Communications
The idea behind KS MSCI One 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. Verizon Communications
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.

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