Correlation Between IShares Select and First Trust
Can any of the company-specific risk be diversified away by investing in both IShares Select 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 Select 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 Select Dividend and First Trust Equity, you can compare the effects of market volatilities on IShares Select 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 Select with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Select and First Trust.
Diversification Opportunities for IShares Select and First Trust
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and First is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding iShares Select Dividend and First Trust Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Equity and IShares Select 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 Select Dividend 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 Equity has no effect on the direction of IShares Select i.e., IShares Select and First Trust go up and down completely randomly.
Pair Corralation between IShares Select and First Trust
Considering the 90-day investment horizon iShares Select Dividend is expected to generate 1.1 times more return on investment than First Trust. However, IShares Select is 1.1 times more volatile than First Trust Equity. It trades about 0.33 of its potential returns per unit of risk. First Trust Equity is currently generating about 0.2 per unit of risk. If you would invest 13,500 in iShares Select Dividend on August 28, 2024 and sell it today you would earn a total of 840.00 from holding iShares Select Dividend or generate 6.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Select Dividend vs. First Trust Equity
Performance |
| Timeline |
| iShares Select Dividend |
| First Trust Equity |
IShares Select and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Select and First Trust
The main advantage of trading using opposite IShares Select and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Select 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 Select vs. SPDR SP Dividend | IShares Select vs. Vanguard Dividend Appreciation | IShares Select vs. iShares Core High | IShares Select vs. iShares Preferred and |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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