Correlation Between Russell Investments and Tangerine Equity

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

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

Diversification Opportunities for Russell Investments and Tangerine Equity

0.85

Correlation Coefficient

Russell Investments  Tangerine Equity

Very poor diversification

The 3 months correlation between Russell and Tangerine is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Russell Investments Global and Tangerine Equity Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tangerine Equity Growth and Russell Investments 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 Investments Global are associated (or correlated) with Tangerine Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tangerine Equity Growth has no effect on the direction of Russell Investments i.e., Russell Investments and Tangerine Equity go up and down completely randomly.

Pair Corralation between Russell Investments and Tangerine Equity

Assuming the 90 days trading horizon Russell Investments is expected to generate 1.13 times less return on investment than Tangerine Equity. But when comparing it to its historical volatility, Russell Investments Global is 1.1 times less risky than Tangerine Equity. It trades about 0.23 of its potential returns per unit of risk. Tangerine Equity Growth is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  1,337  in Tangerine Equity Growth on September 3, 2024 and sell it today you would earn a total of  113.00  from holding Tangerine Equity Growth or generate 8.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.41%
Values	Daily Returns

Russell Investments Global  vs.  Tangerine Equity Growth

Russell Investments

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Russell Investments Global are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly conflicting basic indicators, Russell Investments may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Tangerine Equity Growth

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tangerine Equity Growth are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. Despite quite weak forward-looking signals, Tangerine Equity may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Russell Investments and Tangerine Equity

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

The idea behind Russell Investments Global and Tangerine Equity Growth 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.