Correlation Between IShares Russell and Future Fund
Can any of the company-specific risk be diversified away by investing in both IShares Russell and Future Fund 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 Future Fund 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 The Future Fund, you can compare the effects of market volatilities on IShares Russell and Future Fund 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 Future Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Russell and Future Fund.
Diversification Opportunities for IShares Russell and Future Fund
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and Future is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding iShares Russell 1000 and The Future Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Future Fund 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 Future Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Future Fund has no effect on the direction of IShares Russell i.e., IShares Russell and Future Fund go up and down completely randomly.
Pair Corralation between IShares Russell and Future Fund
Considering the 90-day investment horizon IShares Russell is expected to generate 2.27 times less return on investment than Future Fund. In addition to that, IShares Russell is 1.02 times more volatile than The Future Fund. It trades about 0.11 of its total potential returns per unit of risk. The Future Fund is currently generating about 0.25 per unit of volatility. If you would invest 2,436 in The Future Fund on August 31, 2024 and sell it today you would earn a total of 154.00 from holding The Future Fund or generate 6.32% 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. The Future Fund
Performance |
| Timeline |
| iShares Russell 1000 |
| Future Fund |
IShares Russell and Future Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Russell and Future Fund
The main advantage of trading using opposite IShares Russell and Future Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Russell position performs unexpectedly, Future Fund 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 Future Fund will offset losses from the drop in Future Fund'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 1000 |
| Future Fund vs. Vanguard Growth Index | Future Fund vs. iShares Russell 1000 | Future Fund vs. iShares SP 500 | Future Fund vs. iShares Core SP |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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