Correlation Between Inverse Sp and Russell 2000
Can any of the company-specific risk be diversified away by investing in both Inverse Sp and Russell 2000 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 Inverse Sp and Russell 2000 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inverse Sp 500 and Russell 2000 2x, you can compare the effects of market volatilities on Inverse Sp and Russell 2000 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 Inverse Sp with a short position of Russell 2000. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inverse Sp and Russell 2000.
Diversification Opportunities for Inverse Sp and Russell 2000
-0.9 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Inverse and Russell is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Inverse Sp 500 and Russell 2000 2x in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Russell 2000 2x and Inverse Sp 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 Inverse Sp 500 are associated (or correlated) with Russell 2000. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Russell 2000 2x has no effect on the direction of Inverse Sp i.e., Inverse Sp and Russell 2000 go up and down completely randomly.
Pair Corralation between Inverse Sp and Russell 2000
Assuming the 90 days horizon Inverse Sp 500 is expected to under-perform the Russell 2000. But the mutual fund apears to be less risky and, when comparing its historical volatility, Inverse Sp 500 is 4.39 times less risky than Russell 2000. The mutual fund trades about -0.29 of its potential returns per unit of risk. The Russell 2000 2x is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 16,890 in Russell 2000 2x on September 3, 2024 and sell it today you would earn a total of 3,282 from holding Russell 2000 2x or generate 19.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inverse Sp 500 vs. Russell 2000 2x
Performance |
| Timeline |
| Inverse Sp 500 |
| Russell 2000 2x |
Inverse Sp and Russell 2000 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inverse Sp and Russell 2000
The main advantage of trading using opposite Inverse Sp and Russell 2000 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inverse Sp position performs unexpectedly, Russell 2000 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 Russell 2000 will offset losses from the drop in Russell 2000's long position.| Inverse Sp vs. Shelton Emerging Markets | Inverse Sp vs. Oklahoma College Savings | Inverse Sp vs. Artisan Emerging Markets | Inverse Sp vs. Kinetics Market Opportunities |
| Russell 2000 vs. William Blair Growth | Russell 2000 vs. Artisan Small Cap | Russell 2000 vs. Mid Cap Growth | Russell 2000 vs. Pace Smallmedium Growth |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data |