Correlation Between Fidelity 500 and Ishares Russell
Can any of the company-specific risk be diversified away by investing in both Fidelity 500 and Ishares Russell 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 Fidelity 500 and Ishares Russell into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity 500 Index and Ishares Russell 2000, you can compare the effects of market volatilities on Fidelity 500 and Ishares Russell 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 Fidelity 500 with a short position of Ishares Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity 500 and Ishares Russell.
Diversification Opportunities for Fidelity 500 and Ishares Russell
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fidelity and Ishares is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity 500 Index and Ishares Russell 2000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ishares Russell 2000 and Fidelity 500 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 Fidelity 500 Index are associated (or correlated) with Ishares Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ishares Russell 2000 has no effect on the direction of Fidelity 500 i.e., Fidelity 500 and Ishares Russell go up and down completely randomly.
Pair Corralation between Fidelity 500 and Ishares Russell
Assuming the 90 days horizon Fidelity 500 Index is expected to generate 0.64 times more return on investment than Ishares Russell. However, Fidelity 500 Index is 1.56 times less risky than Ishares Russell. It trades about -0.15 of its potential returns per unit of risk. Ishares Russell 2000 is currently generating about -0.14 per unit of risk. If you would invest 18,060 in Fidelity 500 Index on January 26, 2024 and sell it today you would lose (443.00) from holding Fidelity 500 Index or give up 2.45% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Fidelity 500 Index vs. Ishares Russell 2000
Performance |
Timeline |
Fidelity 500 Index |
Ishares Russell 2000 |
Fidelity 500 and Ishares Russell Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fidelity 500 and Ishares Russell
The main advantage of trading using opposite Fidelity 500 and Ishares Russell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity 500 position performs unexpectedly, Ishares Russell 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 Russell will offset losses from the drop in Ishares Russell's long position.Fidelity 500 vs. Fidelity Flex International | Fidelity 500 vs. Fidelity Flex Mid | Fidelity 500 vs. Fidelity Flex Small | Fidelity 500 vs. Fidelity Flex Municipal |
Ishares Russell vs. Blackrock Intern Index | Ishares Russell vs. Blackrock Sp 500 | Ishares Russell vs. Blackrock Bond Index | Ishares Russell vs. Midcap Fund R 4 |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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