Correlation Between FlexShares STOXX and Select STOXX

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

By analyzing existing cross correlation between FlexShares STOXX Global and Select STOXX Europe, you can compare the effects of market volatilities on FlexShares STOXX and Select STOXX 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 STOXX with a short position of Select STOXX. Check out your portfolio center. Please also check ongoing floating volatility patterns of FlexShares STOXX and Select STOXX.

Diversification Opportunities for FlexShares STOXX and Select STOXX

0.0

Correlation Coefficient

FlexShares STOXX  Select STOXX

Pay attention - limited upside

The 3 months correlation between FlexShares and Select is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding FlexShares STOXX Global and Select STOXX Europe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Select STOXX Europe and FlexShares STOXX 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 STOXX Global are associated (or correlated) with Select STOXX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Select STOXX Europe has no effect on the direction of FlexShares STOXX i.e., FlexShares STOXX and Select STOXX go up and down completely randomly.

Pair Corralation between FlexShares STOXX and Select STOXX

If you would invest  5,513  in FlexShares STOXX Global on February 3, 2025 and sell it today you would earn a total of  457.00  from holding FlexShares STOXX Global or generate 8.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

FlexShares STOXX Global  vs.  Select STOXX Europe

FlexShares STOXX Global

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FlexShares STOXX Global are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, FlexShares STOXX may actually be approaching a critical reversion point that can send shares even higher in June 2025.

Select STOXX Europe

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Select STOXX Europe are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Select STOXX exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FlexShares STOXX and Select STOXX

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

The idea behind FlexShares STOXX Global and Select STOXX Europe 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.

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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.