Correlation Between First Trust and BlackRock Equity
Can any of the company-specific risk be diversified away by investing in both First Trust and BlackRock Equity 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 BlackRock Equity 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 BlackRock Equity Factor, you can compare the effects of market volatilities on First Trust and BlackRock Equity 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 BlackRock Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and BlackRock Equity.
Diversification Opportunities for First Trust and BlackRock Equity
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and BlackRock is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding First Trust SkyBridge and BlackRock Equity Factor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Equity Factor 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 BlackRock Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Equity Factor has no effect on the direction of First Trust i.e., First Trust and BlackRock Equity go up and down completely randomly.
Pair Corralation between First Trust and BlackRock Equity
Given the investment horizon of 90 days First Trust SkyBridge is expected to generate 5.16 times more return on investment than BlackRock Equity. However, First Trust is 5.16 times more volatile than BlackRock Equity Factor. It trades about 0.1 of its potential returns per unit of risk. BlackRock Equity Factor is currently generating about 0.13 per unit of risk. If you would invest 374.00 in First Trust SkyBridge on September 3, 2024 and sell it today you would earn a total of 1,696 from holding First Trust SkyBridge or generate 453.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust SkyBridge vs. BlackRock Equity Factor
Performance |
| Timeline |
| First Trust SkyBridge |
| BlackRock Equity Factor |
First Trust and BlackRock Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and BlackRock Equity
The main advantage of trading using opposite First Trust and BlackRock Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, BlackRock Equity 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 BlackRock Equity will offset losses from the drop in BlackRock Equity'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 |
| BlackRock Equity vs. iShares Focused Value | BlackRock Equity vs. SPDR SSGA Sector | BlackRock Equity vs. iShares Equity Factor | BlackRock Equity vs. iShares MSCI USA |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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