Correlation Between Oppenheimer Russell and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both Oppenheimer Russell and IShares MSCI 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 Oppenheimer Russell and IShares MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oppenheimer Russell 2000 and iShares MSCI EAFE, you can compare the effects of market volatilities on Oppenheimer Russell and IShares MSCI 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 Oppenheimer Russell with a short position of IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oppenheimer Russell and IShares MSCI.
Diversification Opportunities for Oppenheimer Russell and IShares MSCI
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Oppenheimer and IShares is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Oppenheimer Russell 2000 and iShares MSCI EAFE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI EAFE and Oppenheimer 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 Oppenheimer Russell 2000 are associated (or correlated) with IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI EAFE has no effect on the direction of Oppenheimer Russell i.e., Oppenheimer Russell and IShares MSCI go up and down completely randomly.
Pair Corralation between Oppenheimer Russell and IShares MSCI
Given the investment horizon of 90 days Oppenheimer Russell 2000 is expected to under-perform the IShares MSCI. In addition to that, Oppenheimer Russell is 1.76 times more volatile than iShares MSCI EAFE. It trades about -0.22 of its total potential returns per unit of risk. iShares MSCI EAFE is currently generating about -0.28 per unit of volatility. If you would invest 6,317 in iShares MSCI EAFE on January 20, 2024 and sell it today you would lose (258.00) from holding iShares MSCI EAFE or give up 4.08% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 95.45% |
Values | Daily Returns |
Oppenheimer Russell 2000 vs. iShares MSCI EAFE
Performance |
Timeline |
Oppenheimer Russell 2000 |
iShares MSCI EAFE |
Oppenheimer Russell and IShares MSCI Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Oppenheimer Russell and IShares MSCI
The main advantage of trading using opposite Oppenheimer Russell and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oppenheimer Russell position performs unexpectedly, IShares MSCI 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 MSCI will offset losses from the drop in IShares MSCI's long position.Oppenheimer Russell vs. Vanguard Mid Cap Index | Oppenheimer Russell vs. Vanguard Small Cap Value | Oppenheimer Russell vs. Vanguard FTSE Emerging | Oppenheimer Russell vs. Vanguard Large Cap Index |
IShares MSCI vs. Northern Lights | IShares MSCI vs. Dimensional International High | IShares MSCI vs. Matthews China Discovery | IShares MSCI vs. Davis Select International |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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