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 and and First Trust Nasdaq, 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
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and First is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding iShares Dividend and and First Trust Nasdaq in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Nasdaq 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 and 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 Nasdaq 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
Given the investment horizon of 90 days IShares Dividend is expected to generate 2.53 times less return on investment than First Trust. But when comparing it to its historical volatility, iShares Dividend and is 2.07 times less risky than First Trust. It trades about 0.23 of its potential returns per unit of risk. First Trust Nasdaq is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 3,343 in First Trust Nasdaq on August 28, 2024 and sell it today you would earn a total of 368.00 from holding First Trust Nasdaq or generate 11.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Dividend and vs. First Trust Nasdaq
Performance |
| Timeline |
| iShares Dividend |
| First Trust Nasdaq |
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. BlackRock ETF Trust | IShares Dividend vs. Rbb Fund | IShares Dividend vs. Virtus ETF Trust | IShares Dividend vs. Amplify CWP Enhanced |
| First Trust vs. Gabelli ETFs Trust | First Trust vs. First Trust Exchange Traded | First Trust vs. Northern Lights | First Trust vs. First Trust Exchange Traded |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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