Correlation Between First Trust and IShares USD
Can any of the company-specific risk be diversified away by investing in both First Trust and IShares USD 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 USD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust SkyBridge and iShares USD Green, you can compare the effects of market volatilities on First Trust and IShares USD 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 USD. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and IShares USD.
Diversification Opportunities for First Trust and IShares USD
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between First and IShares is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding First Trust SkyBridge and iShares USD Green in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares USD Green 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 SkyBridge are associated (or correlated) with IShares USD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares USD Green has no effect on the direction of First Trust i.e., First Trust and IShares USD go up and down completely randomly.
Pair Corralation between First Trust and IShares USD
Given the investment horizon of 90 days First Trust SkyBridge is expected to generate 14.03 times more return on investment than IShares USD. However, First Trust is 14.03 times more volatile than iShares USD Green. It trades about 0.1 of its potential returns per unit of risk. iShares USD Green is currently generating about 0.05 per unit of risk. If you would invest 374.00 in First Trust SkyBridge on August 30, 2024 and sell it today you would earn a total of 1,683 from holding First Trust SkyBridge or generate 450.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust SkyBridge vs. iShares USD Green
Performance |
| Timeline |
| First Trust SkyBridge |
| iShares USD Green |
First Trust and IShares USD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and IShares USD
The main advantage of trading using opposite First Trust and IShares USD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, IShares USD 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 USD will offset losses from the drop in IShares USD's long position.| First Trust vs. VanEck Digital Transformation | First Trust vs. Bitwise Crypto Industry | First Trust vs. Global X Blockchain | First Trust vs. First Trust Indxx |
| IShares USD vs. iShares ESG USD | IShares USD vs. iShares ESG 1 5 | IShares USD vs. iShares ESG Aggregate | IShares USD vs. iShares ESG Aware |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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