Correlation Between FlexShares International and SPDR MSCI
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 Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 98.41% |
Values | Daily Returns |
FlexShares International Quali vs. SPDR MSCI ACWI
Performance |
Timeline |
FlexShares International |
SPDR MSCI ACWI |
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.
SPDR MSCI vs. SPDR SP International | SPDR MSCI vs. SPDR SP Emerging | SPDR MSCI vs. SPDR Global Dow | SPDR MSCI vs. SPDR SP Global |
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 the ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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