Correlation Between IShares Russell and FundX Aggressive

Can any of the company-specific risk be diversified away by investing in both IShares Russell and FundX Aggressive 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 FundX Aggressive 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 FundX Aggressive ETF, you can compare the effects of market volatilities on IShares Russell and FundX Aggressive 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 FundX Aggressive. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Russell and FundX Aggressive.

Diversification Opportunities for IShares Russell and FundX Aggressive

0.78

Correlation Coefficient

IShares Russell  FundX Aggressive

Poor diversification

The 3 months correlation between IShares and FundX is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding iShares Russell 1000 and FundX Aggressive ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FundX Aggressive ETF 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 FundX Aggressive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FundX Aggressive ETF has no effect on the direction of IShares Russell i.e., IShares Russell and FundX Aggressive go up and down completely randomly.

Pair Corralation between IShares Russell and FundX Aggressive

Considering the 90-day investment horizon iShares Russell 1000 is expected to under-perform the FundX Aggressive. In addition to that, IShares Russell is 1.0 times more volatile than FundX Aggressive ETF. It trades about -0.12 of its total potential returns per unit of risk. FundX Aggressive ETF is currently generating about -0.09 per unit of volatility. If you would invest  7,226  in FundX Aggressive ETF on December 28, 2024 and sell it today you would lose (567.00) from holding FundX Aggressive ETF or give up 7.85% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

iShares Russell 1000  vs.  FundX Aggressive ETF

iShares Russell 1000

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Russell 1000 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Etf's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the Exchange Traded Fund stockholders.

FundX Aggressive ETF

Risk-Adjusted Performance

Very Weak

Over the last 90 days FundX Aggressive ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Etf's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the fund sophisticated investors.

Pair Trading with IShares Russell and FundX Aggressive

The main advantage of trading using opposite IShares Russell and FundX Aggressive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Russell position performs unexpectedly, FundX Aggressive 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 FundX Aggressive will offset losses from the drop in FundX Aggressive's long position.

The idea behind iShares Russell 1000 and FundX Aggressive ETF 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.