Correlation Between IShares Dividend and First Trust
Can any of the company-specific risk be diversified away by investing in both IShares Dividend and First Trust 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 IShares Dividend and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Dividend Growers and First Trust Value, you can compare the effects of market volatilities on IShares Dividend and First Trust 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 IShares Dividend with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Dividend and First Trust.
Diversification Opportunities for IShares Dividend and First Trust
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and First is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding iShares Dividend Growers and First Trust Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Value and IShares Dividend 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 iShares Dividend Growers are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Value has no effect on the direction of IShares Dividend i.e., IShares Dividend and First Trust go up and down completely randomly.
Pair Corralation between IShares Dividend and First Trust
Assuming the 90 days trading horizon iShares Dividend Growers is expected to generate 1.12 times more return on investment than First Trust. However, IShares Dividend is 1.12 times more volatile than First Trust Value. It trades about 0.06 of its potential returns per unit of risk. First Trust Value is currently generating about 0.06 per unit of risk. If you would invest 4,804 in iShares Dividend Growers on August 26, 2024 and sell it today you would earn a total of 839.00 from holding iShares Dividend Growers or generate 17.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Dividend Growers vs. First Trust Value
Performance |
| Timeline |
| iShares Dividend Growers |
| First Trust Value |
IShares Dividend and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Dividend and First Trust
The main advantage of trading using opposite IShares Dividend and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Dividend position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| IShares Dividend vs. BMO Europe High | IShares Dividend vs. BMO Covered Call | IShares Dividend vs. BMO Covered Call | IShares Dividend vs. BMO Europe High |
| First Trust vs. First Trust Global | First Trust vs. FT AlphaDEX Industrials | First Trust vs. First Trust Senior | First Trust vs. First Trust AlphaDEX |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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