Correlation Between FlexShares Morningstar and Axonic Strategic

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

By analyzing existing cross correlation between FlexShares Morningstar Developed and Axonic Strategic Income, you can compare the effects of market volatilities on FlexShares Morningstar and Axonic Strategic 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 Morningstar with a short position of Axonic Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of FlexShares Morningstar and Axonic Strategic.

Diversification Opportunities for FlexShares Morningstar and Axonic Strategic

0.26

Correlation Coefficient

FlexShares Morningstar  Axonic Strategic

Modest diversification

The 3 months correlation between FlexShares and Axonic is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding FlexShares Morningstar Develop and Axonic Strategic Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axonic Strategic Income and FlexShares Morningstar 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 Morningstar Developed are associated (or correlated) with Axonic Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axonic Strategic Income has no effect on the direction of FlexShares Morningstar i.e., FlexShares Morningstar and Axonic Strategic go up and down completely randomly.

Pair Corralation between FlexShares Morningstar and Axonic Strategic

Given the investment horizon of 90 days FlexShares Morningstar Developed is expected to generate 9.8 times more return on investment than Axonic Strategic. However, FlexShares Morningstar is 9.8 times more volatile than Axonic Strategic Income. It trades about 0.12 of its potential returns per unit of risk. Axonic Strategic Income is currently generating about 0.05 per unit of risk. If you would invest  7,326  in FlexShares Morningstar Developed on February 28, 2025 and sell it today you would earn a total of  824.48  from holding FlexShares Morningstar Developed or generate 11.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

FlexShares Morningstar Develop  vs.  Axonic Strategic Income

FlexShares Morningstar

Risk-Adjusted Performance

OK

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

Axonic Strategic Income

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Axonic Strategic Income are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Axonic Strategic 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 Morningstar and Axonic Strategic

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

The idea behind FlexShares Morningstar Developed and Axonic Strategic Income 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.