Correlation Between IShares Russell and MicroSectors FANG

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

By analyzing existing cross correlation between iShares Russell Top and MicroSectors FANG Index, you can compare the effects of market volatilities on IShares Russell and MicroSectors FANG 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 MicroSectors FANG. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Russell and MicroSectors FANG.

Diversification Opportunities for IShares Russell and MicroSectors FANG

-0.75

Correlation Coefficient

IShares Russell  MicroSectors FANG

Pay attention - limited upside

The 3 months correlation between IShares and MicroSectors is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding iShares Russell Top and MicroSectors FANG Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MicroSectors FANG Index 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 Top are associated (or correlated) with MicroSectors FANG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MicroSectors FANG Index has no effect on the direction of IShares Russell i.e., IShares Russell and MicroSectors FANG go up and down completely randomly.

Pair Corralation between IShares Russell and MicroSectors FANG

Considering the 90-day investment horizon iShares Russell Top is expected to generate 0.17 times more return on investment than MicroSectors FANG. However, iShares Russell Top is 5.98 times less risky than MicroSectors FANG. It trades about 0.13 of its potential returns per unit of risk. MicroSectors FANG Index is currently generating about -0.11 per unit of risk. If you would invest  8,620  in iShares Russell Top on September 2, 2025 and sell it today you would earn a total of  454.00  from holding iShares Russell Top or generate 5.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

iShares Russell Top  vs.  MicroSectors FANG Index

iShares Russell Top

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Russell Top are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, IShares Russell is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

MicroSectors FANG Index

Risk-Adjusted Performance

Weakest

Over the last 90 days MicroSectors FANG Index has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2026. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.

Pair Trading with IShares Russell and MicroSectors FANG

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

The idea behind iShares Russell Top and MicroSectors FANG Index 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.