Correlation Between IShares Russell and Barings Global
Can any of the company-specific risk be diversified away by investing in both IShares Russell and Barings Global 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 Barings Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Russell 2000 and Barings Global Short, you can compare the effects of market volatilities on IShares Russell and Barings Global 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 Barings Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Russell and Barings Global.
Diversification Opportunities for IShares Russell and Barings Global
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and Barings is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding iShares Russell 2000 and Barings Global Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barings Global Short 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 2000 are associated (or correlated) with Barings Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barings Global Short has no effect on the direction of IShares Russell i.e., IShares Russell and Barings Global go up and down completely randomly.
Pair Corralation between IShares Russell and Barings Global
Considering the 90-day investment horizon iShares Russell 2000 is expected to generate 1.38 times more return on investment than Barings Global. However, IShares Russell is 1.38 times more volatile than Barings Global Short. It trades about 0.24 of its potential returns per unit of risk. Barings Global Short is currently generating about 0.17 per unit of risk. If you would invest 22,144 in iShares Russell 2000 on August 31, 2024 and sell it today you would earn a total of 1,951 from holding iShares Russell 2000 or generate 8.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Russell 2000 vs. Barings Global Short
Performance |
| Timeline |
| iShares Russell 2000 |
| Barings Global Short |
IShares Russell and Barings Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Russell and Barings Global
The main advantage of trading using opposite IShares Russell and Barings Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Russell position performs unexpectedly, Barings Global 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 Barings Global will offset losses from the drop in Barings Global's long position.| IShares Russell vs. SPDR Dow Jones | IShares Russell vs. iShares MSCI Emerging | IShares Russell vs. Financial Select Sector | IShares Russell vs. SPDR SP 500 |
| Barings Global vs. Eaton Vance National | Barings Global vs. Invesco High Income | Barings Global vs. Blackrock Muniholdings Ny | Barings Global vs. Nuveen California Select |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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