Correlation Between Proshares Russell and IShares Core
Can any of the company-specific risk be diversified away by investing in both Proshares Russell and IShares Core 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 Proshares Russell and IShares Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Proshares Russell 2000 and iShares Core Total, you can compare the effects of market volatilities on Proshares Russell and IShares Core 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 Proshares Russell with a short position of IShares Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Proshares Russell and IShares Core.
Diversification Opportunities for Proshares Russell and IShares Core
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Proshares and IShares is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Proshares Russell 2000 and iShares Core Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core Total and Proshares Russell 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 Proshares Russell 2000 are associated (or correlated) with IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core Total has no effect on the direction of Proshares Russell i.e., Proshares Russell and IShares Core go up and down completely randomly.
Pair Corralation between Proshares Russell and IShares Core
Given the investment horizon of 90 days Proshares Russell 2000 is expected to generate 3.62 times more return on investment than IShares Core. However, Proshares Russell is 3.62 times more volatile than iShares Core Total. It trades about 0.14 of its potential returns per unit of risk. iShares Core Total is currently generating about -0.2 per unit of risk. If you would invest 4,076 in Proshares Russell 2000 on August 26, 2024 and sell it today you would earn a total of 271.00 from holding Proshares Russell 2000 or generate 6.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Proshares Russell 2000 vs. iShares Core Total
Performance |
| Timeline |
| Proshares Russell 2000 |
| iShares Core Total |
Proshares Russell and IShares Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Proshares Russell and IShares Core
The main advantage of trading using opposite Proshares Russell and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Proshares Russell position performs unexpectedly, IShares Core 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 Core will offset losses from the drop in IShares Core's long position.The idea behind Proshares Russell 2000 and iShares Core Total 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.| IShares Core vs. First Trust Low | IShares Core vs. First Trust Enhanced | IShares Core vs. First Trust Tactical | IShares Core vs. First Trust Managed |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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