Correlation Between IShares Russell and IShares SP
Can any of the company-specific risk be diversified away by investing in both IShares Russell and IShares SP 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 IShares SP 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 iShares SP 500, you can compare the effects of market volatilities on IShares Russell and IShares SP 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 IShares SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Russell and IShares SP.
Diversification Opportunities for IShares Russell and IShares SP
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between IShares and IShares is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding iShares Russell 1000 and iShares SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares SP 500 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 IShares SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares SP 500 has no effect on the direction of IShares Russell i.e., IShares Russell and IShares SP go up and down completely randomly.
Pair Corralation between IShares Russell and IShares SP
Considering the 90-day investment horizon iShares Russell 1000 is expected to generate 1.03 times more return on investment than IShares SP. However, IShares Russell is 1.03 times more volatile than iShares SP 500. It trades about 0.16 of its potential returns per unit of risk. iShares SP 500 is currently generating about 0.14 per unit of risk. If you would invest 37,866 in iShares Russell 1000 on August 24, 2024 and sell it today you would earn a total of 1,506 from holding iShares Russell 1000 or generate 3.98% 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. iShares SP 500
Performance |
| Timeline |
| iShares Russell 1000 |
| iShares SP 500 |
IShares Russell and IShares SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Russell and IShares SP
The main advantage of trading using opposite IShares Russell and IShares SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Russell position performs unexpectedly, IShares SP 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 SP will offset losses from the drop in IShares SP'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 |
| IShares SP vs. FT Vest Equity | IShares SP vs. Northern Lights | IShares SP vs. Dimensional International High | IShares SP 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
Other Complementary Tools
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Stocks Directory Find actively traded stocks across global markets | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |