Correlation Between FlexShares Credit and BondBloxx ETF

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

By analyzing existing cross correlation between FlexShares Credit Scored Corporate and BondBloxx ETF Trust, you can compare the effects of market volatilities on FlexShares Credit and BondBloxx ETF 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 Credit with a short position of BondBloxx ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of FlexShares Credit and BondBloxx ETF.

Diversification Opportunities for FlexShares Credit and BondBloxx ETF

0.9

Correlation Coefficient

FlexShares Credit  BondBloxx ETF

Almost no diversification

The 3 months correlation between FlexShares and BondBloxx is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding FlexShares Credit Scored Corpo and BondBloxx ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BondBloxx ETF Trust and FlexShares Credit 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 Credit Scored Corporate are associated (or correlated) with BondBloxx ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BondBloxx ETF Trust has no effect on the direction of FlexShares Credit i.e., FlexShares Credit and BondBloxx ETF go up and down completely randomly.

Pair Corralation between FlexShares Credit and BondBloxx ETF

Given the investment horizon of 90 days FlexShares Credit is expected to generate 1.78 times less return on investment than BondBloxx ETF. But when comparing it to its historical volatility, FlexShares Credit Scored Corporate is 3.08 times less risky than BondBloxx ETF. It trades about 0.04 of its potential returns per unit of risk. BondBloxx ETF Trust is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  5,001  in BondBloxx ETF Trust on September 2, 2024 and sell it today you would earn a total of  39.00  from holding BondBloxx ETF Trust or generate 0.78% return on investment over 90 days.

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

FlexShares Credit Scored Corpo  vs.  BondBloxx ETF Trust

FlexShares Credit

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FlexShares Credit Scored Corporate are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, FlexShares Credit is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

BondBloxx ETF Trust

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days BondBloxx ETF Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, BondBloxx ETF is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with FlexShares Credit and BondBloxx ETF

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

The idea behind FlexShares Credit Scored Corporate and BondBloxx ETF Trust 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.