Correlation Between IShares Russell and 6 Meridian
Can any of the company-specific risk be diversified away by investing in both IShares Russell and 6 Meridian 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 6 Meridian 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 6 Meridian Mega, you can compare the effects of market volatilities on IShares Russell and 6 Meridian 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 6 Meridian. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Russell and 6 Meridian.
Diversification Opportunities for IShares Russell and 6 Meridian
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and SIXA is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding iShares Russell 1000 and 6 Meridian Mega in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 6 Meridian Mega 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 6 Meridian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 6 Meridian Mega has no effect on the direction of IShares Russell i.e., IShares Russell and 6 Meridian go up and down completely randomly.
Pair Corralation between IShares Russell and 6 Meridian
Considering the 90-day investment horizon iShares Russell 1000 is expected to generate 1.31 times more return on investment than 6 Meridian. However, IShares Russell is 1.31 times more volatile than 6 Meridian Mega. It trades about 0.27 of its potential returns per unit of risk. 6 Meridian Mega is currently generating about 0.14 per unit of risk. If you would invest 19,040 in iShares Russell 1000 on August 28, 2024 and sell it today you would earn a total of 877.00 from holding iShares Russell 1000 or generate 4.61% 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. 6 Meridian Mega
Performance |
| Timeline |
| iShares Russell 1000 |
| 6 Meridian Mega |
IShares Russell and 6 Meridian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Russell and 6 Meridian
The main advantage of trading using opposite IShares Russell and 6 Meridian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Russell position performs unexpectedly, 6 Meridian 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 6 Meridian will offset losses from the drop in 6 Meridian's long position.| IShares Russell vs. iShares Russell 1000 | IShares Russell vs. iShares Russell 2000 | IShares Russell vs. iShares Russell 2000 | IShares Russell vs. iShares Russell Mid Cap |
| 6 Meridian vs. BlackRock ETF Trust | 6 Meridian vs. Rbb Fund | 6 Meridian vs. Virtus ETF Trust | 6 Meridian vs. Amplify CWP Enhanced |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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