Correlation Between First Trust and IShares 1
Can any of the company-specific risk be diversified away by investing in both First Trust and IShares 1 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 1 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 1 3 Year, you can compare the effects of market volatilities on First Trust and IShares 1 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 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and IShares 1.
Diversification Opportunities for First Trust and IShares 1
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between First and IShares is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding First Trust SkyBridge and iShares 1 3 Year in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares 1 3 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 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares 1 3 has no effect on the direction of First Trust i.e., First Trust and IShares 1 go up and down completely randomly.
Pair Corralation between First Trust and IShares 1
Given the investment horizon of 90 days First Trust SkyBridge is expected to generate 12.11 times more return on investment than IShares 1. However, First Trust is 12.11 times more volatile than iShares 1 3 Year. It trades about 0.09 of its potential returns per unit of risk. iShares 1 3 Year is currently generating about -0.01 per unit of risk. If you would invest 1,330 in First Trust SkyBridge on August 24, 2024 and sell it today you would earn a total of 631.00 from holding First Trust SkyBridge or generate 47.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust SkyBridge vs. iShares 1 3 Year
Performance |
| Timeline |
| First Trust SkyBridge |
| iShares 1 3 |
First Trust and IShares 1 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and IShares 1
The main advantage of trading using opposite First Trust and IShares 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, IShares 1 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 1 will offset losses from the drop in IShares 1'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 1 vs. Invesco Fundamental Investment | IShares 1 vs. iShares International High | IShares 1 vs. VanEck International High |
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
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |