Correlation Between Mesirow Financial and Ishares Russell

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

By analyzing existing cross correlation between Mesirow Financial High and Ishares Russell 1000, you can compare the effects of market volatilities on Mesirow Financial 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 Mesirow Financial with a short position of Ishares Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mesirow Financial and Ishares Russell.

Diversification Opportunities for Mesirow Financial and Ishares Russell

0.55

Correlation Coefficient

Mesirow Financial  Ishares Russell

Very weak diversification

The 3 months correlation between Mesirow and Ishares is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Mesirow Financial High and Ishares Russell 1000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ishares Russell 1000 and Mesirow Financial 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 Mesirow Financial High 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 1000 has no effect on the direction of Mesirow Financial i.e., Mesirow Financial and Ishares Russell go up and down completely randomly.

Pair Corralation between Mesirow Financial and Ishares Russell

Assuming the 90 days horizon Mesirow Financial High is expected to under-perform the Ishares Russell. But the mutual fund apears to be less risky and, when comparing its historical volatility, Mesirow Financial High is 4.37 times less risky than Ishares Russell. The mutual fund trades about -0.13 of its potential returns per unit of risk. The Ishares Russell 1000 is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  4,751  in Ishares Russell 1000 on October 9, 2024 and sell it today you would lose (43.00) from holding Ishares Russell 1000 or give up 0.91% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	97.5%
Values	Daily Returns

Mesirow Financial High  vs.  Ishares Russell 1000

Mesirow Financial High

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mesirow Financial High has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Mesirow Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ishares Russell 1000

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ishares Russell 1000 are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. 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 Mesirow Financial and Ishares Russell

The main advantage of trading using opposite Mesirow Financial and Ishares Russell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mesirow Financial 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 Mesirow Financial High and Ishares Russell 1000 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.