Correlation Between FlexShares International and SPDR MSCI

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

Diversification Opportunities for FlexShares International and SPDR MSCI

1.0
  Correlation Coefficient

No risk reduction

The 3 months correlation between FlexShares and SPDR is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding FlexShares International Quali and SPDR MSCI ACWI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR MSCI ACWI and FlexShares International 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 International Quality are associated (or correlated) with SPDR MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR MSCI ACWI has no effect on the direction of FlexShares International i.e., FlexShares International and SPDR MSCI go up and down completely randomly.

Pair Corralation between FlexShares International and SPDR MSCI

Given the investment horizon of 90 days FlexShares International Quality is expected to generate 1.03 times more return on investment than SPDR MSCI. However, FlexShares International is 1.03 times more volatile than SPDR MSCI ACWI. It trades about 0.31 of its potential returns per unit of risk. SPDR MSCI ACWI is currently generating about 0.31 per unit of risk. If you would invest  2,844  in FlexShares International Quality on April 22, 2025 and sell it today you would earn a total of  396.00  from holding FlexShares International Quality or generate 13.92% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy98.41%
ValuesDaily Returns

FlexShares International Quali  vs.  SPDR MSCI ACWI

 Performance 
       Timeline  
FlexShares International 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in FlexShares International Quality are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating fundamental indicators, FlexShares International showed solid returns over the last few months and may actually be approaching a breakup point.
SPDR MSCI ACWI 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in SPDR MSCI ACWI are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, SPDR MSCI demonstrated solid returns over the last few months and may actually be approaching a breakup point.

FlexShares International and SPDR MSCI Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with FlexShares International and SPDR MSCI

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

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