Correlation Between IShares Russell and Princeton Fund

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

Diversification Opportunities for IShares Russell and Princeton Fund

0.72

Correlation Coefficient

IShares Russell  Princeton Fund

Poor diversification

The 3 months correlation between IShares and Princeton is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding iShares Russell 1000 and Princeton Fund Advisors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Princeton Fund Advisors 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 Princeton Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Princeton Fund Advisors has no effect on the direction of IShares Russell i.e., IShares Russell and Princeton Fund go up and down completely randomly.

Pair Corralation between IShares Russell and Princeton Fund

If you would invest  37,210  in iShares Russell 1000 on September 20, 2024 and sell it today you would earn a total of  3,084  from holding iShares Russell 1000 or generate 8.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.59%
Values	Daily Returns

iShares Russell 1000  vs.  Princeton Fund Advisors

iShares Russell 1000

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Russell 1000 are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, IShares Russell may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Princeton Fund Advisors

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Princeton Fund Advisors has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Princeton Fund is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with IShares Russell and Princeton Fund

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

The idea behind iShares Russell 1000 and Princeton Fund Advisors 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.