Correlation Between IShares Russell and Congress Large

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

Diversification Opportunities for IShares Russell and Congress Large

0.99

Correlation Coefficient

IShares Russell  Congress Large

No risk reduction

The 3 months correlation between IShares and Congress is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding iShares Russell 1000 and Congress Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Congress Large Cap 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 Congress Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Congress Large Cap has no effect on the direction of IShares Russell i.e., IShares Russell and Congress Large go up and down completely randomly.

Pair Corralation between IShares Russell and Congress Large

Considering the 90-day investment horizon IShares Russell is expected to generate 1.0 times less return on investment than Congress Large. In addition to that, IShares Russell is 1.17 times more volatile than Congress Large Cap. It trades about 0.28 of its total potential returns per unit of risk. Congress Large Cap is currently generating about 0.33 per unit of volatility. If you would invest  3,029  in Congress Large Cap on February 9, 2025 and sell it today you would earn a total of  288.00  from holding Congress Large Cap or generate 9.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.45%
Values	Daily Returns

iShares Russell 1000  vs.  Congress Large Cap

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.

Congress Large Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Congress Large Cap has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Etf's primary indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the ETF venture institutional investors.

Pair Trading with IShares Russell and Congress Large

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

The idea behind iShares Russell 1000 and Congress Large Cap 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.