Correlation Between IShares Core and LG Russell
Can any of the company-specific risk be diversified away by investing in both IShares Core and LG 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 Core and LG Russell into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Core MSCI and LG Russell 2000, you can compare the effects of market volatilities on IShares Core and LG 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 Core with a short position of LG Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and LG Russell.
Diversification Opportunities for IShares Core and LG Russell
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and RTWO is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core MSCI and LG Russell 2000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Russell 2000 and IShares Core 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 Core MSCI are associated (or correlated) with LG Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Russell 2000 has no effect on the direction of IShares Core i.e., IShares Core and LG Russell go up and down completely randomly.
Pair Corralation between IShares Core and LG Russell
Assuming the 90 days trading horizon iShares Core MSCI is expected to under-perform the LG Russell. But the etf apears to be less risky and, when comparing its historical volatility, iShares Core MSCI is 2.78 times less risky than LG Russell. The etf trades about -0.01 of its potential returns per unit of risk. The LG Russell 2000 is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 9,722 in LG Russell 2000 on September 2, 2024 and sell it today you would earn a total of 1,292 from holding LG Russell 2000 or generate 13.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Core MSCI vs. LG Russell 2000
Performance |
| Timeline |
| iShares Core MSCI |
| LG Russell 2000 |
IShares Core and LG Russell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and LG Russell
The main advantage of trading using opposite IShares Core and LG Russell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, LG 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 LG Russell will offset losses from the drop in LG Russell's long position.| IShares Core vs. BlackRock ESG Multi Asset | IShares Core vs. Pershing Square Holdings | IShares Core vs. ASML Holding NV | IShares Core vs. Koninklijke Philips NV |
| LG Russell vs. VanEck Multi Asset Growth | LG Russell vs. iShares III Public | LG Russell vs. iShares Core MSCI | LG Russell vs. iShares France Govt |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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