Correlation Between IShares Russell and ETRACS IFED
Can any of the company-specific risk be diversified away by investing in both IShares Russell and ETRACS IFED 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 Russell and ETRACS IFED into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Russell 1000 and ETRACS IFED Invest, you can compare the effects of market volatilities on IShares Russell and ETRACS IFED 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 Russell with a short position of ETRACS IFED. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Russell and ETRACS IFED.
Diversification Opportunities for IShares Russell and ETRACS IFED
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and ETRACS is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding iShares Russell 1000 and ETRACS IFED Invest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETRACS IFED Invest and IShares 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 iShares Russell 1000 are associated (or correlated) with ETRACS IFED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETRACS IFED Invest has no effect on the direction of IShares Russell i.e., IShares Russell and ETRACS IFED go up and down completely randomly.
Pair Corralation between IShares Russell and ETRACS IFED
Considering the 90-day investment horizon IShares Russell is expected to generate 2.44 times less return on investment than ETRACS IFED. But when comparing it to its historical volatility, iShares Russell 1000 is 1.25 times less risky than ETRACS IFED. It trades about 0.19 of its potential returns per unit of risk. ETRACS IFED Invest is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 3,905 in ETRACS IFED Invest on August 26, 2024 and sell it today you would earn a total of 358.00 from holding ETRACS IFED Invest or generate 9.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Russell 1000 vs. ETRACS IFED Invest
Performance |
| Timeline |
| iShares Russell 1000 |
| ETRACS IFED Invest |
IShares Russell and ETRACS IFED Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Russell and ETRACS IFED
The main advantage of trading using opposite IShares Russell and ETRACS IFED positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Russell position performs unexpectedly, ETRACS IFED 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 ETRACS IFED will offset losses from the drop in ETRACS IFED's long position.| 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 |
| ETRACS IFED vs. FT Vest Equity | ETRACS IFED vs. Northern Lights | ETRACS IFED vs. Dimensional International High | ETRACS IFED vs. First Trust Exchange Traded |
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.
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