Correlation Between Russell 3000 and Total Stock

By analyzing existing cross correlation between Russell 3000 Ishares and Total Stock Market, you can compare the effects of market volatilities on Russell 3000 and Total Stock 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 Russell 3000 with a short position of Total Stock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Russell 3000 and Total Stock.

Specify exactly 2 symbols:

Can any of the company-specific risk be diversified away by investing in both Russell 3000 and Total Stock 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 Russell 3000 and Total Stock into the same portfolio, which is an essential part of the fundamental portfolio management process.

Diversification Opportunities for Russell 3000 and Total Stock

1.0
  Correlation Coefficient
Russell 3000 Ishares
Total Stock Market

No risk reduction

The 3 months correlation between Russell and Total is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Russell 3000 Ishares and Total Stock Market in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Total Stock Market and Russell 3000 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 Russell 3000 Ishares are associated (or correlated) with Total Stock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Total Stock Market has no effect on the direction of Russell 3000 i.e., Russell 3000 and Total Stock go up and down completely randomly.

Pair Corralation between Russell 3000 and Total Stock

Considering the 90-day investment horizon Russell 3000 Ishares is expected to generate 0.97 times more return on investment than Total Stock. However, Russell 3000 Ishares is 1.03 times less risky than Total Stock. It trades about 0.07 of its potential returns per unit of risk. Total Stock Market is currently generating about 0.06 per unit of risk. If you would invest  26,361  in Russell 3000 Ishares on July 24, 2021 and sell it today you would earn a total of  561.00  from holding Russell 3000 Ishares or generate 2.13% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Russell 3000 Ishares  vs.  Total Stock Market

 Performance (%) 
      Timeline 
Russell 3000 Ishares 
 Russell Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Russell 3000 Ishares are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Russell 3000 is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Russell Price Channel

Total Stock Market 
 Total Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Total Stock Market are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Total Stock is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Total Price Channel

Russell 3000 and Total Stock Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Russell 3000 and Total Stock

The main advantage of trading using opposite Russell 3000 and Total Stock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Russell 3000 position performs unexpectedly, Total Stock 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 Total Stock will offset losses from the drop in Total Stock's long position.
The idea behind Russell 3000 Ishares and Total Stock Market pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Shere Portfolio module to track or share privately all of your investments from the convenience of any device.

Other Complementary Tools

CEO Directory
Screen CEOs from public companies around the world
Go
Instant Ratings
Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance
Go
Watchlist Optimization
Optimize watchlists to build efficient portfolio or rebalance existing positions based on mean-variance optimization algorithm
Go
Aroon Oscillator
Analyze current equity momentum using Aroon Oscillator and other momentum ratios
Go
Equity Analysis
Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities
Go
Piotroski F Score
Get Piotroski F Score based on binary analysis strategy of nine different fundamentals
Go
Equity Valuation
Check real value of public entities based on technical and fundamental data
Go
Stock Tickers
Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites
Go
Price Ceiling Movement
Calculate and plot Price Ceiling Movement for different equity instruments
Go
Companies Directory
Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals
Go