Correlation Between IShares II and LG Russell
Can any of the company-specific risk be diversified away by investing in both IShares II 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 II 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 II Public and LG Russell 2000, you can compare the effects of market volatilities on IShares II 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 II with a short position of LG Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares II and LG Russell.
Diversification Opportunities for IShares II and LG Russell
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and RTWO is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding iShares II Public 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 II 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 II Public 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 II i.e., IShares II and LG Russell go up and down completely randomly.
Pair Corralation between IShares II and LG Russell
Assuming the 90 days trading horizon iShares II Public is expected to under-perform the LG Russell. But the etf apears to be less risky and, when comparing its historical volatility, iShares II Public is 1.43 times less risky than LG Russell. The etf trades about -0.03 of its potential returns per unit of risk. The LG Russell 2000 is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 9,042 in LG Russell 2000 on September 1, 2024 and sell it today you would earn a total of 1,972 from holding LG Russell 2000 or generate 21.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.24% |
| Values | Daily Returns |
iShares II Public vs. LG Russell 2000
Performance |
| Timeline |
| iShares II Public |
| LG Russell 2000 |
IShares II and LG Russell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares II and LG Russell
The main advantage of trading using opposite IShares II and LG Russell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares II 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 II vs. iShares Core MSCI | IShares II vs. BlackRock ESG Multi Asset | IShares II vs. Pershing Square Holdings | IShares II vs. ASML Holding 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Stocks Directory Find actively traded stocks across global markets | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |