Correlation Between LG Russell and BlackRock ESG
Can any of the company-specific risk be diversified away by investing in both LG Russell and BlackRock ESG 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 LG Russell and BlackRock ESG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Russell 2000 and BlackRock ESG Multi Asset, you can compare the effects of market volatilities on LG Russell and BlackRock ESG 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 LG Russell with a short position of BlackRock ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Russell and BlackRock ESG.
Diversification Opportunities for LG Russell and BlackRock ESG
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between RTWO and BlackRock is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding LG Russell 2000 and BlackRock ESG Multi Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock ESG Multi and LG 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 LG Russell 2000 are associated (or correlated) with BlackRock ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock ESG Multi has no effect on the direction of LG Russell i.e., LG Russell and BlackRock ESG go up and down completely randomly.
Pair Corralation between LG Russell and BlackRock ESG
Assuming the 90 days trading horizon LG Russell 2000 is expected to generate 3.09 times more return on investment than BlackRock ESG. However, LG Russell is 3.09 times more volatile than BlackRock ESG Multi Asset. It trades about 0.27 of its potential returns per unit of risk. BlackRock ESG Multi Asset is currently generating about 0.21 per unit of risk. If you would invest 9,853 in LG Russell 2000 on August 31, 2024 and sell it today you would earn a total of 1,215 from holding LG Russell 2000 or generate 12.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Russell 2000 vs. BlackRock ESG Multi Asset
Performance |
| Timeline |
| LG Russell 2000 |
| BlackRock ESG Multi |
LG Russell and BlackRock ESG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Russell and BlackRock ESG
The main advantage of trading using opposite LG Russell and BlackRock ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Russell position performs unexpectedly, BlackRock ESG 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 BlackRock ESG will offset losses from the drop in BlackRock ESG's long position.| LG Russell vs. iShares Core MSCI | LG Russell vs. Vanguard FTSE All World | LG Russell vs. BlackRock ESG Multi Asset | LG Russell vs. Pershing Square Holdings |
| BlackRock ESG vs. BlackRock ESG Multi Asset | BlackRock ESG vs. LG Russell 2000 | BlackRock ESG vs. VanEck Multi Asset Growth | BlackRock ESG vs. iShares III Public |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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