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
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Inverse and Banking is -0.88. 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. In addition to that, Inverse Russell is 1.0 times more volatile than Banking Fund Class. It trades about -0.04 of its total potential returns per unit of risk. Banking Fund Class is currently generating about 0.1 per unit of volatility. If you would invest 5,351 in Banking Fund Class on September 12, 2024 and sell it today you would earn a total of 2,881 from holding Banking Fund Class or generate 53.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| 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. Allianzgi Technology Fund | Inverse Russell vs. Biotechnology Ultrasector Profund | Inverse Russell vs. Janus Global Technology | Inverse Russell vs. Firsthand Technology Opportunities |
| Banking Fund vs. Vanguard Financials Index | Banking Fund vs. Regional Bank Fund | Banking Fund vs. Regional Bank Fund | Banking Fund vs. T Rowe Price |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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