Correlation Between IShares Russell and Nushares ETF
Can any of the company-specific risk be diversified away by investing in both IShares Russell and Nushares ETF 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 Nushares ETF 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 Nushares ETF Trust, you can compare the effects of market volatilities on IShares Russell and Nushares ETF 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 Nushares ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Russell and Nushares ETF.
Diversification Opportunities for IShares Russell and Nushares ETF
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and Nushares is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding iShares Russell 1000 and Nushares ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nushares ETF Trust 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 Nushares ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nushares ETF Trust has no effect on the direction of IShares Russell i.e., IShares Russell and Nushares ETF go up and down completely randomly.
Pair Corralation between IShares Russell and Nushares ETF
Considering the 90-day investment horizon iShares Russell 1000 is expected to generate 0.95 times more return on investment than Nushares ETF. However, iShares Russell 1000 is 1.06 times less risky than Nushares ETF. It trades about 0.07 of its potential returns per unit of risk. Nushares ETF Trust is currently generating about 0.06 per unit of risk. If you would invest 15,238 in iShares Russell 1000 on August 23, 2024 and sell it today you would earn a total of 4,154 from holding iShares Russell 1000 or generate 27.26% 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. Nushares ETF Trust
Performance |
| Timeline |
| iShares Russell 1000 |
| Nushares ETF Trust |
IShares Russell and Nushares ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Russell and Nushares ETF
The main advantage of trading using opposite IShares Russell and Nushares ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Russell position performs unexpectedly, Nushares ETF 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 Nushares ETF will offset losses from the drop in Nushares ETF's long position.| IShares Russell vs. Vanguard Russell 1000 | IShares Russell vs. Vanguard Russell 2000 | IShares Russell vs. Vanguard Russell 3000 | IShares Russell vs. Vanguard Russell 2000 |
| Nushares ETF vs. Vanguard Russell 1000 | Nushares ETF vs. Vanguard Russell 2000 | Nushares ETF vs. Vanguard Russell 3000 | Nushares ETF vs. Vanguard Russell 2000 |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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