Correlation Between FlexShares Disciplined and Fieldstone UVA

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

By analyzing existing cross correlation between FlexShares Disciplined Duration and Fieldstone UVA Unconstrained, you can compare the effects of market volatilities on FlexShares Disciplined and Fieldstone UVA 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 Disciplined with a short position of Fieldstone UVA. Check out your portfolio center. Please also check ongoing floating volatility patterns of FlexShares Disciplined and Fieldstone UVA.

Diversification Opportunities for FlexShares Disciplined and Fieldstone UVA

0.98

Correlation Coefficient

FlexShares Disciplined  Fieldstone UVA

Almost no diversification

The 3 months correlation between FlexShares and Fieldstone is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding FlexShares Disciplined Duratio and Fieldstone UVA Unconstrained in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fieldstone UVA Uncon and FlexShares Disciplined 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 Disciplined Duration are associated (or correlated) with Fieldstone UVA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fieldstone UVA Uncon has no effect on the direction of FlexShares Disciplined i.e., FlexShares Disciplined and Fieldstone UVA go up and down completely randomly.

Pair Corralation between FlexShares Disciplined and Fieldstone UVA

Given the investment horizon of 90 days FlexShares Disciplined is expected to generate 1.05 times less return on investment than Fieldstone UVA. But when comparing it to its historical volatility, FlexShares Disciplined Duration is 1.27 times less risky than Fieldstone UVA. It trades about 0.03 of its potential returns per unit of risk. Fieldstone UVA Unconstrained is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,041  in Fieldstone UVA Unconstrained on August 26, 2024 and sell it today you would earn a total of  132.00  from holding Fieldstone UVA Unconstrained or generate 6.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

FlexShares Disciplined Duratio  vs.  Fieldstone UVA Unconstrained

FlexShares Disciplined

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FlexShares Disciplined Duration has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, FlexShares Disciplined is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Fieldstone UVA Uncon

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fieldstone UVA Unconstrained has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, Fieldstone UVA is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with FlexShares Disciplined and Fieldstone UVA

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

The idea behind FlexShares Disciplined Duration and Fieldstone UVA Unconstrained 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.