Correlation Between First Trust and IShares Environmentally
Can any of the company-specific risk be diversified away by investing in both First Trust and IShares Environmentally 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 Environmentally into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Exchange Traded and iShares Environmentally Aware, you can compare the effects of market volatilities on First Trust and IShares Environmentally 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 Environmentally. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and IShares Environmentally.
Diversification Opportunities for First Trust and IShares Environmentally
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and IShares is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Exchange Traded and iShares Environmentally Aware in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Environmentally 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 Exchange Traded are associated (or correlated) with IShares Environmentally. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Environmentally has no effect on the direction of First Trust i.e., First Trust and IShares Environmentally go up and down completely randomly.
Pair Corralation between First Trust and IShares Environmentally
Given the investment horizon of 90 days First Trust Exchange Traded is expected to under-perform the IShares Environmentally. In addition to that, First Trust is 1.14 times more volatile than iShares Environmentally Aware. It trades about -0.01 of its total potential returns per unit of risk. iShares Environmentally Aware is currently generating about 0.01 per unit of volatility. If you would invest 2,504 in iShares Environmentally Aware on October 25, 2024 and sell it today you would earn a total of 18.00 from holding iShares Environmentally Aware or generate 0.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Exchange Traded vs. iShares Environmentally Aware
Performance |
| Timeline |
| First Trust Exchange |
| iShares Environmentally |
First Trust and IShares Environmentally Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and IShares Environmentally
The main advantage of trading using opposite First Trust and IShares Environmentally positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, IShares Environmentally 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 Environmentally will offset losses from the drop in IShares Environmentally's long position.| First Trust vs. FlexShares Global Quality | First Trust vs. ALPS REIT Dividend | First Trust vs. WisdomTree New Economy | First Trust vs. First Trust RBA |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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