Correlation Between First Trust and IShares International
Can any of the company-specific risk be diversified away by investing in both First Trust and IShares International 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 International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust RBA and iShares International Developed, you can compare the effects of market volatilities on First Trust and IShares International 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 International. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and IShares International.
Diversification Opportunities for First Trust and IShares International
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between First and IShares is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding First Trust RBA and iShares International Develope in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares International 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 RBA are associated (or correlated) with IShares International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares International has no effect on the direction of First Trust i.e., First Trust and IShares International go up and down completely randomly.
Pair Corralation between First Trust and IShares International
Given the investment horizon of 90 days First Trust RBA is expected to generate 0.99 times more return on investment than IShares International. However, First Trust RBA is 1.01 times less risky than IShares International. It trades about 0.16 of its potential returns per unit of risk. iShares International Developed is currently generating about 0.03 per unit of risk. If you would invest 3,124 in First Trust RBA on August 27, 2024 and sell it today you would earn a total of 954.00 from holding First Trust RBA or generate 30.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust RBA vs. iShares International Develope
Performance |
| Timeline |
| First Trust RBA |
| iShares International |
First Trust and IShares International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and IShares International
The main advantage of trading using opposite First Trust and IShares International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, IShares International 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 International will offset losses from the drop in IShares International's long position.| First Trust vs. First Trust Dorsey | First Trust vs. First Trust Dorsey | First Trust vs. First Trust Dorsey | First Trust vs. First Trust Equity |
| IShares International vs. iShares International Treasury | IShares International vs. iShares 1 3 Year | IShares International vs. iShares MSCI Emerging |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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