Correlation Between Wahed FTSE and Oppenheimer Russell
Can any of the company-specific risk be diversified away by investing in both Wahed FTSE and Oppenheimer 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 Wahed FTSE and Oppenheimer Russell into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wahed FTSE USA and Oppenheimer Russell 1000, you can compare the effects of market volatilities on Wahed FTSE and Oppenheimer 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 Wahed FTSE with a short position of Oppenheimer Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wahed FTSE and Oppenheimer Russell.
Diversification Opportunities for Wahed FTSE and Oppenheimer Russell
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Wahed and Oppenheimer is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Wahed FTSE USA and Oppenheimer Russell 1000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oppenheimer Russell 1000 and Wahed FTSE 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 Wahed FTSE USA are associated (or correlated) with Oppenheimer Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oppenheimer Russell 1000 has no effect on the direction of Wahed FTSE i.e., Wahed FTSE and Oppenheimer Russell go up and down completely randomly.
Pair Corralation between Wahed FTSE and Oppenheimer Russell
Given the investment horizon of 90 days Wahed FTSE USA is expected to generate 0.85 times more return on investment than Oppenheimer Russell. However, Wahed FTSE USA is 1.17 times less risky than Oppenheimer Russell. It trades about -0.12 of its potential returns per unit of risk. Oppenheimer Russell 1000 is currently generating about -0.12 per unit of risk. If you would invest 4,803 in Wahed FTSE USA on January 26, 2024 and sell it today you would lose (99.00) from holding Wahed FTSE USA or give up 2.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wahed FTSE USA vs. Oppenheimer Russell 1000
Performance |
| Timeline |
| Wahed FTSE USA |
| Oppenheimer Russell 1000 |
Wahed FTSE and Oppenheimer Russell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wahed FTSE and Oppenheimer Russell
The main advantage of trading using opposite Wahed FTSE and Oppenheimer Russell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wahed FTSE position performs unexpectedly, Oppenheimer 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 Oppenheimer Russell will offset losses from the drop in Oppenheimer Russell's long position.| Wahed FTSE vs. SPDR MSCI EAFE | Wahed FTSE vs. SPDR MSCI Emerging | Wahed FTSE vs. SPDR Russell 1000 | Wahed FTSE vs. SPDR Russell 1000 |
| Oppenheimer Russell vs. SPDR MSCI EAFE | Oppenheimer Russell vs. SPDR MSCI Emerging | Oppenheimer Russell vs. SPDR Russell 1000 | Oppenheimer Russell vs. SPDR Russell 1000 |
Check out your portfolio center.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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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