Correlation Between IShares Russell and IShares Core
Can any of the company-specific risk be diversified away by investing in both IShares Russell and IShares Core 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 IShares Russell and IShares Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Russell 1000 and iShares Core SP, you can compare the effects of market volatilities on IShares Russell and IShares Core 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 IShares Russell with a short position of IShares Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Russell and IShares Core.
Diversification Opportunities for IShares Russell and IShares Core
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between IShares and IShares is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding iShares Russell 1000 and iShares Core SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core SP and IShares 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 iShares Russell 1000 are associated (or correlated) with IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core SP has no effect on the direction of IShares Russell i.e., IShares Russell and IShares Core go up and down completely randomly.
Pair Corralation between IShares Russell and IShares Core
Considering the 90-day investment horizon iShares Russell 1000 is expected to generate 1.03 times more return on investment than IShares Core. However, IShares Russell is 1.03 times more volatile than iShares Core SP. It trades about 0.05 of its potential returns per unit of risk. iShares Core SP is currently generating about 0.04 per unit of risk. If you would invest 24,265 in iShares Russell 1000 on January 17, 2024 and sell it today you would earn a total of 8,436 from holding iShares Russell 1000 or generate 34.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Russell 1000 vs. iShares Core SP
Performance |
| Timeline |
| iShares Russell 1000 |
| iShares Core SP |
IShares Russell and IShares Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Russell and IShares Core
The main advantage of trading using opposite IShares Russell and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Russell position performs unexpectedly, IShares Core 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 Core will offset losses from the drop in IShares Core's long position.| IShares Russell vs. HUMANA INC | IShares Russell vs. Sparta Capital | IShares Russell vs. T Rowe Price | IShares Russell vs. Bondbloxx ETF Trust |
| IShares Core vs. HUMANA INC | IShares Core vs. Sparta Capital | IShares Core vs. T Rowe Price | IShares Core vs. Bondbloxx ETF Trust |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital |