Correlation Between IMGP DBi and FlexShares Real

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

By analyzing existing cross correlation between iMGP DBi Managed and FlexShares Real Assets, you can compare the effects of market volatilities on IMGP DBi and FlexShares Real 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 IMGP DBi with a short position of FlexShares Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of IMGP DBi and FlexShares Real.

Diversification Opportunities for IMGP DBi and FlexShares Real

0.72

Correlation Coefficient

IMGP DBi  FlexShares Real

Poor diversification

The 3 months correlation between IMGP and FlexShares is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding iMGP DBi Managed and FlexShares Real Assets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShares Real Assets and IMGP DBi 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 iMGP DBi Managed are associated (or correlated) with FlexShares Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShares Real Assets has no effect on the direction of IMGP DBi i.e., IMGP DBi and FlexShares Real go up and down completely randomly.

Pair Corralation between IMGP DBi and FlexShares Real

Given the investment horizon of 90 days iMGP DBi Managed is expected to generate 0.69 times more return on investment than FlexShares Real. However, iMGP DBi Managed is 1.44 times less risky than FlexShares Real. It trades about -0.14 of its potential returns per unit of risk. FlexShares Real Assets is currently generating about -0.17 per unit of risk. If you would invest  2,803  in iMGP DBi Managed on September 22, 2024 and sell it today you would lose (117.00) from holding iMGP DBi Managed or give up 4.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

iMGP DBi Managed  vs.  FlexShares Real Assets

iMGP DBi Managed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iMGP DBi Managed has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, IMGP DBi is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

FlexShares Real Assets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FlexShares Real Assets has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Etf's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Pair Trading with IMGP DBi and FlexShares Real

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

The idea behind iMGP DBi Managed and FlexShares Real Assets 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.