Correlation Between First Trust and IShares Russell
Can any of the company-specific risk be diversified away by investing in both First Trust and IShares Russell 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 Russell 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 Russell Top, you can compare the effects of market volatilities on First Trust and IShares Russell 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 Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and IShares Russell.
Diversification Opportunities for First Trust and IShares Russell
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between First and IShares is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding First Trust SkyBridge and iShares Russell Top in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Russell Top 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 Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Russell Top has no effect on the direction of First Trust i.e., First Trust and IShares Russell go up and down completely randomly.
Pair Corralation between First Trust and IShares Russell
Given the investment horizon of 90 days First Trust SkyBridge is expected to generate 7.04 times more return on investment than IShares Russell. However, First Trust is 7.04 times more volatile than iShares Russell Top. It trades about 0.09 of its potential returns per unit of risk. iShares Russell Top is currently generating about 0.09 per unit of risk. If you would invest 409.00 in First Trust SkyBridge on September 3, 2024 and sell it today you would earn a total of 1,661 from holding First Trust SkyBridge or generate 406.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust SkyBridge vs. iShares Russell Top
Performance |
| Timeline |
| First Trust SkyBridge |
| iShares Russell Top |
First Trust and IShares Russell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and IShares Russell
The main advantage of trading using opposite First Trust and IShares Russell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, IShares Russell 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 Russell will offset losses from the drop in IShares Russell'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 Russell vs. FT Vest Equity | IShares Russell vs. Northern Lights | IShares Russell vs. Dimensional International High | IShares Russell vs. JPMorgan Fundamental Data |
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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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