Correlation Between First Trust and IShares Canadian
Can any of the company-specific risk be diversified away by investing in both First Trust and IShares Canadian 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 First Trust and IShares Canadian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Indxx and iShares Canadian HYBrid, you can compare the effects of market volatilities on First Trust and IShares Canadian 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 First Trust with a short position of IShares Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and IShares Canadian.
Diversification Opportunities for First Trust and IShares Canadian
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and IShares is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Indxx and iShares Canadian HYBrid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Canadian HYBrid and First Trust 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 First Trust Indxx are associated (or correlated) with IShares Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Canadian HYBrid has no effect on the direction of First Trust i.e., First Trust and IShares Canadian go up and down completely randomly.
Pair Corralation between First Trust and IShares Canadian
Assuming the 90 days trading horizon First Trust Indxx is expected to generate 1.46 times more return on investment than IShares Canadian. However, First Trust is 1.46 times more volatile than iShares Canadian HYBrid. It trades about 0.18 of its potential returns per unit of risk. iShares Canadian HYBrid is currently generating about 0.24 per unit of risk. If you would invest 3,248 in First Trust Indxx on September 3, 2024 and sell it today you would earn a total of 66.00 from holding First Trust Indxx or generate 2.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Indxx vs. iShares Canadian HYBrid
Performance |
| Timeline |
| First Trust Indxx |
| iShares Canadian HYBrid |
First Trust and IShares Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and IShares Canadian
The main advantage of trading using opposite First Trust and IShares Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, IShares Canadian 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 IShares Canadian will offset losses from the drop in IShares Canadian's long position.| First Trust vs. International Zeolite Corp | First Trust vs. European Residential Real | First Trust vs. Financial 15 Split | First Trust vs. Rubicon Organics |
| IShares Canadian vs. iShares IG Corporate | IShares Canadian vs. iShares High Yield | IShares Canadian vs. iShares Floating Rate | IShares Canadian vs. iShares JP Morgan |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |