Correlation Between Inverse Russell and Banking Fund
Can any of the company-specific risk be diversified away by investing in both Inverse Russell and Banking Fund 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 Russell and Banking Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inverse Russell 2000 and Banking Fund Class, you can compare the effects of market volatilities on Inverse Russell and Banking Fund 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 Russell with a short position of Banking Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inverse Russell and Banking Fund.
Diversification Opportunities for Inverse Russell and Banking Fund
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Inverse and Banking is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Inverse Russell 2000 and Banking Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banking Fund Class and Inverse 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 Inverse Russell 2000 are associated (or correlated) with Banking Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banking Fund Class has no effect on the direction of Inverse Russell i.e., Inverse Russell and Banking Fund go up and down completely randomly.
Pair Corralation between Inverse Russell and Banking Fund
Assuming the 90 days horizon Inverse Russell 2000 is expected to under-perform the Banking Fund. But the mutual fund apears to be less risky and, when comparing its historical volatility, Inverse Russell 2000 is 1.12 times less risky than Banking Fund. The mutual fund trades about -0.15 of its potential returns per unit of risk. The Banking Fund Class is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 7,416 in Banking Fund Class on November 2, 2024 and sell it today you would earn a total of 613.00 from holding Banking Fund Class or generate 8.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Inverse Russell 2000 vs. Banking Fund Class
Performance |
| Timeline |
| Inverse Russell 2000 |
| Banking Fund Class |
Inverse Russell and Banking Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inverse Russell and Banking Fund
The main advantage of trading using opposite Inverse Russell and Banking Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inverse Russell position performs unexpectedly, Banking Fund 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 Banking Fund will offset losses from the drop in Banking Fund's long position.| Inverse Russell vs. Amg Managers Centersquare | Inverse Russell vs. Prudential Real Estate | Inverse Russell vs. Short Real Estate | Inverse Russell vs. Tiaa Cref Real Estate |
| Banking Fund vs. Basic Materials Fund | Banking Fund vs. Basic Materials Fund | Banking Fund vs. Banking Fund Class | Banking Fund vs. Basic Materials Fund |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
Other Complementary Tools
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |