Correlation Between IShares Treasury and FIRST TRUST
Can any of the company-specific risk be diversified away by investing in both IShares Treasury 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 Treasury 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 Treasury Bond and FIRST TRUST INDXX, you can compare the effects of market volatilities on IShares Treasury 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 Treasury with a short position of FIRST TRUST. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Treasury and FIRST TRUST.
Diversification Opportunities for IShares Treasury and FIRST TRUST
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and FIRST is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding iShares Treasury Bond and FIRST TRUST INDXX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIRST TRUST INDXX and IShares Treasury 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 Treasury Bond 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 INDXX has no effect on the direction of IShares Treasury i.e., IShares Treasury and FIRST TRUST go up and down completely randomly.
Pair Corralation between IShares Treasury and FIRST TRUST
Assuming the 90 days trading horizon iShares Treasury Bond is expected to under-perform the FIRST TRUST. In addition to that, IShares Treasury is 1.13 times more volatile than FIRST TRUST INDXX. It trades about 0.0 of its total potential returns per unit of risk. FIRST TRUST INDXX is currently generating about 0.09 per unit of volatility. If you would invest 2,142 in FIRST TRUST INDXX on September 20, 2024 and sell it today you would earn a total of 995.00 from holding FIRST TRUST INDXX or generate 46.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
iShares Treasury Bond vs. FIRST TRUST INDXX
Performance |
| Timeline |
| iShares Treasury Bond |
| FIRST TRUST INDXX |
IShares Treasury and FIRST TRUST Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Treasury and FIRST TRUST
The main advantage of trading using opposite IShares Treasury and FIRST TRUST positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Treasury 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 Treasury vs. Vanguard FTSE Developed | IShares Treasury vs. Leverage Shares 2x | IShares Treasury vs. Amundi Index Solutions | IShares Treasury vs. Amundi Index Solutions |
| FIRST TRUST vs. Scottish Mortgage Investment | FIRST TRUST vs. VinaCapital Vietnam Opportunity | FIRST TRUST vs. Edinburgh Worldwide Investment | FIRST TRUST vs. Baillie Gifford Growth |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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