Correlation Between IShares Russell and HCM Defender
Can any of the company-specific risk be diversified away by investing in both IShares Russell and HCM Defender 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 HCM Defender 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 HCM Defender 100, you can compare the effects of market volatilities on IShares Russell and HCM Defender 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 HCM Defender. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Russell and HCM Defender.
Diversification Opportunities for IShares Russell and HCM Defender
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between IShares and HCM is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding iShares Russell 1000 and HCM Defender 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCM Defender 100 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 HCM Defender. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HCM Defender 100 has no effect on the direction of IShares Russell i.e., IShares Russell and HCM Defender go up and down completely randomly.
Pair Corralation between IShares Russell and HCM Defender
Considering the 90-day investment horizon IShares Russell is expected to generate 1.09 times less return on investment than HCM Defender. But when comparing it to its historical volatility, iShares Russell 1000 is 1.23 times less risky than HCM Defender. It trades about 0.12 of its potential returns per unit of risk. HCM Defender 100 is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3,525 in HCM Defender 100 on August 30, 2024 and sell it today you would earn a total of 3,026 from holding HCM Defender 100 or generate 85.84% 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. HCM Defender 100
Performance |
| Timeline |
| iShares Russell 1000 |
| HCM Defender 100 |
IShares Russell and HCM Defender Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Russell and HCM Defender
The main advantage of trading using opposite IShares Russell and HCM Defender positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Russell position performs unexpectedly, HCM Defender 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 HCM Defender will offset losses from the drop in HCM Defender'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 |
| HCM Defender vs. iShares MSCI USA | HCM Defender vs. iShares MSCI USA | HCM Defender vs. iShares MSCI USA | HCM Defender vs. iShares Expanded Tech Software |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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