Correlation Between FlexShares High and IShares Edge

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

By analyzing existing cross correlation between FlexShares High Yield and iShares Edge High, you can compare the effects of market volatilities on FlexShares High and IShares Edge 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 High with a short position of IShares Edge. Check out your portfolio center. Please also check ongoing floating volatility patterns of FlexShares High and IShares Edge.

Diversification Opportunities for FlexShares High and IShares Edge

0.99

Correlation Coefficient

FlexShares High  IShares Edge

No risk reduction

The 3 months correlation between FlexShares and IShares is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding FlexShares High Yield and iShares Edge High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Edge High and FlexShares High 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 High Yield are associated (or correlated) with IShares Edge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Edge High has no effect on the direction of FlexShares High i.e., FlexShares High and IShares Edge go up and down completely randomly.

Pair Corralation between FlexShares High and IShares Edge

Given the investment horizon of 90 days FlexShares High Yield is expected to generate 1.14 times more return on investment than IShares Edge. However, FlexShares High is 1.14 times more volatile than iShares Edge High. It trades about 0.27 of its potential returns per unit of risk. iShares Edge High is currently generating about 0.28 per unit of risk. If you would invest  3,891  in FlexShares High Yield on May 6, 2025 and sell it today you would earn a total of  184.00  from holding FlexShares High Yield or generate 4.73% return on investment over 90 days.

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

FlexShares High Yield  vs.  iShares Edge High

FlexShares High Yield

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FlexShares High Yield are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable technical and fundamental indicators, FlexShares High is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

iShares Edge High

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Edge High are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, IShares Edge is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with FlexShares High and IShares Edge

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

The idea behind FlexShares High Yield and iShares Edge High 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.