Correlation Between IShares Trust and IShares Russell
Can any of the company-specific risk be diversified away by investing in both IShares Trust 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 Trust 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 Trust and iShares Russell Mid Cap, you can compare the effects of market volatilities on IShares Trust 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 Trust with a short position of IShares Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Trust and IShares Russell.
Diversification Opportunities for IShares Trust and IShares Russell
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and IShares is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and iShares Russell Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Russell Mid and IShares Trust 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 Trust 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 Mid has no effect on the direction of IShares Trust i.e., IShares Trust and IShares Russell go up and down completely randomly.
Pair Corralation between IShares Trust and IShares Russell
Given the investment horizon of 90 days IShares Trust is expected to generate 2.16 times less return on investment than IShares Russell. In addition to that, IShares Trust is 1.35 times more volatile than iShares Russell Mid Cap. It trades about 0.03 of its total potential returns per unit of risk. iShares Russell Mid Cap is currently generating about 0.08 per unit of volatility. If you would invest 6,809 in iShares Russell Mid Cap on August 26, 2024 and sell it today you would earn a total of 2,644 from holding iShares Russell Mid Cap or generate 38.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Trust vs. iShares Russell Mid Cap
Performance |
| Timeline |
| iShares Trust |
| iShares Russell Mid |
IShares Trust and IShares Russell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Trust and IShares Russell
The main advantage of trading using opposite IShares Trust and IShares Russell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Trust 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 Trust vs. First Trust Exchange Traded | IShares Trust vs. Ultimus Managers Trust | IShares Trust vs. Horizon Kinetics Medical | IShares Trust vs. Harbor Health Care |
| IShares Russell vs. Vanguard Mid Cap Index | IShares Russell vs. Vanguard Extended Market | IShares Russell vs. SPDR SP MIDCAP | IShares Russell vs. First Trust Dorsey |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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