Correlation Between NYSE Composite and IShares Russell
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and IShares Russell into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and iShares Russell 1000, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of IShares Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and IShares Russell.
Diversification Opportunities for NYSE Composite and IShares Russell
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NYSE and IShares is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and iShares Russell 1000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Russell 1000 and NYSE Composite 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 NYSE Composite 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 1000 has no effect on the direction of NYSE Composite i.e., NYSE Composite and IShares Russell go up and down completely randomly.
Pair Corralation between NYSE Composite and IShares Russell
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.41 times less return on investment than IShares Russell. But when comparing it to its historical volatility, NYSE Composite is 1.22 times less risky than IShares Russell. It trades about 0.13 of its potential returns per unit of risk. iShares Russell 1000 is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 19,096 in iShares Russell 1000 on August 24, 2024 and sell it today you would earn a total of 515.00 from holding iShares Russell 1000 or generate 2.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. iShares Russell 1000
Performance |
| Timeline |
NYSE Composite and IShares Russell Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
iShares Russell 1000
Pair trading matchups for IShares Russell
Pair Trading with NYSE Composite and IShares Russell
The main advantage of trading using opposite NYSE Composite and IShares Russell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Akanda Corp | NYSE Composite vs. Valneva SE ADR | NYSE Composite vs. Radcom | NYSE Composite vs. Western Digital |
| IShares Russell vs. Vanguard Russell 1000 | IShares Russell vs. Vanguard Russell 2000 | IShares Russell vs. Vanguard Russell 3000 | IShares Russell vs. Vanguard Russell 2000 |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |