Correlation Between FT Vest and IShares Russell

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

By analyzing existing cross correlation between FT Vest Equity and iShares Russell Top, you can compare the effects of market volatilities on FT Vest 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 FT Vest with a short position of IShares Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of FT Vest and IShares Russell.

Diversification Opportunities for FT Vest and IShares Russell

0.41

Correlation Coefficient

FT Vest  IShares Russell

Very weak diversification

The 3 months correlation between DHDG and IShares is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding FT Vest Equity and iShares Russell Top in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Russell Top and FT Vest 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 FT Vest Equity 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 Top has no effect on the direction of FT Vest i.e., FT Vest and IShares Russell go up and down completely randomly.

Pair Corralation between FT Vest and IShares Russell

Given the investment horizon of 90 days FT Vest is expected to generate 1.68 times less return on investment than IShares Russell. But when comparing it to its historical volatility, FT Vest Equity is 1.56 times less risky than IShares Russell. It trades about 0.07 of its potential returns per unit of risk. iShares Russell Top is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  6,232  in iShares Russell Top on September 24, 2024 and sell it today you would earn a total of  1,636  from holding iShares Russell Top or generate 26.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	9.05%
Values	Daily Returns

FT Vest Equity  vs.  iShares Russell Top

FT Vest Equity

Risk-Adjusted Performance

5 of 100

Modest

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

iShares Russell Top

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Russell Top has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, IShares Russell is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with FT Vest and IShares Russell

The main advantage of trading using opposite FT Vest and IShares Russell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FT Vest 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.

The idea behind FT Vest Equity and iShares Russell Top 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.

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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.