Correlation Between IShares Consumer and IShares Russell
Can any of the company-specific risk be diversified away by investing in both IShares Consumer and IShares Russell 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 Consumer and IShares Russell into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Consumer Staples and iShares Russell 3000, you can compare the effects of market volatilities on IShares Consumer and IShares Russell 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 Consumer with a short position of IShares Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Consumer and IShares Russell.
Diversification Opportunities for IShares Consumer and IShares Russell
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between IShares and IShares is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding iShares Consumer Staples and iShares Russell 3000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Russell 3000 and IShares Consumer 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 Consumer Staples are associated (or correlated) with IShares Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Russell 3000 has no effect on the direction of IShares Consumer i.e., IShares Consumer and IShares Russell go up and down completely randomly.
Pair Corralation between IShares Consumer and IShares Russell
Considering the 90-day investment horizon IShares Consumer is expected to generate 1.43 times less return on investment than IShares Russell. In addition to that, IShares Consumer is 1.21 times more volatile than iShares Russell 3000. It trades about 0.12 of its total potential returns per unit of risk. iShares Russell 3000 is currently generating about 0.21 per unit of volatility. If you would invest 33,373 in iShares Russell 3000 on November 3, 2024 and sell it today you would earn a total of 1,281 from holding iShares Russell 3000 or generate 3.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Consumer Staples vs. iShares Russell 3000
Performance |
| Timeline |
| iShares Consumer Staples |
| iShares Russell 3000 |
IShares Consumer and IShares Russell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Consumer and IShares Russell
The main advantage of trading using opposite IShares Consumer and IShares Russell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Consumer position performs unexpectedly, IShares Russell 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 Russell will offset losses from the drop in IShares Russell's long position.| IShares Consumer vs. iShares Consumer Discretionary | IShares Consumer vs. iShares Industrials ETF | IShares Consumer vs. iShares Utilities ETF | IShares Consumer vs. iShares Basic Materials |
| IShares Russell vs. iShares Russell 1000 | IShares Russell vs. iShares Dow Jones | IShares Russell vs. iShares SP Mid Cap | IShares Russell vs. iShares SP Mid Cap |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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