Correlation Between Russell Investment and Upright Growth

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

By analyzing existing cross correlation between Russell Investment Tax Managed and Upright Growth Income, you can compare the effects of market volatilities on Russell Investment and Upright Growth 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 Investment with a short position of Upright Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Russell Investment and Upright Growth.

Diversification Opportunities for Russell Investment and Upright Growth

0.64

Correlation Coefficient

Russell Investment  Upright Growth

Poor diversification

The 3 months correlation between Russell and Upright is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Russell Investment Tax Managed and Upright Growth Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Upright Growth Income and Russell Investment 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 Investment Tax Managed are associated (or correlated) with Upright Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Upright Growth Income has no effect on the direction of Russell Investment i.e., Russell Investment and Upright Growth go up and down completely randomly.

Pair Corralation between Russell Investment and Upright Growth

Assuming the 90 days horizon Russell Investment Tax Managed is expected to generate 0.28 times more return on investment than Upright Growth. However, Russell Investment Tax Managed is 3.58 times less risky than Upright Growth. It trades about 0.06 of its potential returns per unit of risk. Upright Growth Income is currently generating about -0.03 per unit of risk. If you would invest  1,199  in Russell Investment Tax Managed on December 20, 2024 and sell it today you would earn a total of  33.00  from holding Russell Investment Tax Managed or generate 2.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

Russell Investment Tax Managed  vs.  Upright Growth Income

Russell Investment Tax

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Russell Investment Tax Managed are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Russell Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Upright Growth Income

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Russell Investment and Upright Growth

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

The idea behind Russell Investment Tax Managed and Upright Growth Income 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.