Correlation Between IShares JP and IShares Russell
Can any of the company-specific risk be diversified away by investing in both IShares JP and IShares Russell 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 IShares JP and IShares Russell into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares JP Morgan and iShares Russell 1000, you can compare the effects of market volatilities on IShares JP and IShares Russell 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 IShares JP with a short position of IShares Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares JP and IShares Russell.
Diversification Opportunities for IShares JP and IShares Russell
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between IShares and IShares is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding iShares JP Morgan and iShares Russell 1000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Russell 1000 and IShares JP 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 iShares JP Morgan are associated (or correlated) with IShares Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Russell 1000 has no effect on the direction of IShares JP i.e., IShares JP and IShares Russell go up and down completely randomly.
Pair Corralation between IShares JP and IShares Russell
Considering the 90-day investment horizon IShares JP is expected to generate 3.0 times less return on investment than IShares Russell. But when comparing it to its historical volatility, iShares JP Morgan is 1.5 times less risky than IShares Russell. It trades about 0.06 of its potential returns per unit of risk. iShares Russell 1000 is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 20,854 in iShares Russell 1000 on August 31, 2024 and sell it today you would earn a total of 12,399 from holding iShares Russell 1000 or generate 59.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares JP Morgan vs. iShares Russell 1000
Performance |
| Timeline |
| iShares JP Morgan |
| iShares Russell 1000 |
IShares JP and IShares Russell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares JP and IShares Russell
The main advantage of trading using opposite IShares JP and IShares Russell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares JP position performs unexpectedly, IShares Russell 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 Russell will offset losses from the drop in IShares Russell's long position.| IShares JP vs. Invesco Emerging Markets | IShares JP vs. iShares JP Morgan | IShares JP vs. SPDR Bloomberg Barclays | IShares JP vs. SPDR DoubleLine Emerging |
| IShares Russell vs. iShares Russell 3000 | IShares Russell vs. iShares Russell Mid Cap | IShares Russell vs. iShares Russell 1000 | IShares Russell vs. iShares Russell 2000 |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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