Correlation Between IShares Russell and Hilton Small

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

By analyzing existing cross correlation between iShares Russell Mid Cap and Hilton Small MidCap Opportunity, you can compare the effects of market volatilities on IShares Russell and Hilton Small 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 Hilton Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Russell and Hilton Small.

Diversification Opportunities for IShares Russell and Hilton Small

0.9

Correlation Coefficient

IShares Russell  Hilton Small

Almost no diversification

The 3 months correlation between IShares and Hilton is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding iShares Russell Mid Cap and Hilton Small MidCap Opportunit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hilton Small MidCap 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 Mid Cap are associated (or correlated) with Hilton Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hilton Small MidCap has no effect on the direction of IShares Russell i.e., IShares Russell and Hilton Small go up and down completely randomly.

Pair Corralation between IShares Russell and Hilton Small

Considering the 90-day investment horizon iShares Russell Mid Cap is expected to generate 0.87 times more return on investment than Hilton Small. However, iShares Russell Mid Cap is 1.15 times less risky than Hilton Small. It trades about -0.1 of its potential returns per unit of risk. Hilton Small MidCap Opportunity is currently generating about -0.12 per unit of risk. If you would invest  9,477  in iShares Russell Mid Cap on December 1, 2024 and sell it today you would lose (531.00) from holding iShares Russell Mid Cap or give up 5.6% of portfolio value over 90 days.

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

iShares Russell Mid Cap  vs.  Hilton Small MidCap Opportunit

iShares Russell Mid

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Russell Mid Cap has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, IShares Russell is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Hilton Small MidCap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hilton Small MidCap Opportunity has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Etf's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

Pair Trading with IShares Russell and Hilton Small

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

The idea behind iShares Russell Mid Cap and Hilton Small MidCap Opportunity 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.