Correlation Between US Treasury and IShares Russell
Can any of the company-specific risk be diversified away by investing in both US Treasury 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 US Treasury and IShares Russell into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Treasury 12 and iShares Russell 2000, you can compare the effects of market volatilities on US Treasury 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 US Treasury with a short position of IShares Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Treasury and IShares Russell.
Diversification Opportunities for US Treasury and IShares Russell
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between OBIL and IShares is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding US Treasury 12 and iShares Russell 2000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Russell 2000 and US Treasury 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 US Treasury 12 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 2000 has no effect on the direction of US Treasury i.e., US Treasury and IShares Russell go up and down completely randomly.
Pair Corralation between US Treasury and IShares Russell
Given the investment horizon of 90 days US Treasury 12 is expected to generate 0.04 times more return on investment than IShares Russell. However, US Treasury 12 is 26.34 times less risky than IShares Russell. It trades about 0.38 of its potential returns per unit of risk. iShares Russell 2000 is currently generating about 0.01 per unit of risk. If you would invest 4,892 in US Treasury 12 on October 26, 2024 and sell it today you would earn a total of 121.00 from holding US Treasury 12 or generate 2.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
US Treasury 12 vs. iShares Russell 2000
Performance |
| Timeline |
| US Treasury 12 |
| iShares Russell 2000 |
US Treasury and IShares Russell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Treasury and IShares Russell
The main advantage of trading using opposite US Treasury and IShares Russell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Treasury 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.| US Treasury vs. Rbb Fund | US Treasury vs. Rbb Fund | US Treasury vs. Rbb Fund | US Treasury vs. US Treasury 6 |
| IShares Russell vs. iShares Russell 2000 | IShares Russell vs. iShares Russell 1000 | IShares Russell vs. iShares Russell Mid Cap | IShares Russell vs. iShares Russell 1000 |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |