Correlation Between IShares AsiaPacific and First Trust
Can any of the company-specific risk be diversified away by investing in both IShares AsiaPacific 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 AsiaPacific 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 AsiaPacific Dividend and First Trust Intl, you can compare the effects of market volatilities on IShares AsiaPacific 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 AsiaPacific with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares AsiaPacific and First Trust.
Diversification Opportunities for IShares AsiaPacific and First Trust
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and First is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding iShares AsiaPacific Dividend and First Trust Intl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Intl and IShares AsiaPacific 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 AsiaPacific 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 Intl has no effect on the direction of IShares AsiaPacific i.e., IShares AsiaPacific and First Trust go up and down completely randomly.
Pair Corralation between IShares AsiaPacific and First Trust
Given the investment horizon of 90 days iShares AsiaPacific Dividend is expected to generate 1.17 times more return on investment than First Trust. However, IShares AsiaPacific is 1.17 times more volatile than First Trust Intl. It trades about -0.05 of its potential returns per unit of risk. First Trust Intl is currently generating about -0.09 per unit of risk. If you would invest 3,829 in iShares AsiaPacific Dividend on September 13, 2024 and sell it today you would lose (73.00) from holding iShares AsiaPacific Dividend or give up 1.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares AsiaPacific Dividend vs. First Trust Intl
Performance |
| Timeline |
| iShares AsiaPacific |
| First Trust Intl |
IShares AsiaPacific and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares AsiaPacific and First Trust
The main advantage of trading using opposite IShares AsiaPacific and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares AsiaPacific 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 AsiaPacific vs. Freedom Day Dividend | IShares AsiaPacific vs. Franklin Templeton ETF | IShares AsiaPacific vs. iShares MSCI China | IShares AsiaPacific vs. Tidal Trust II |
| First Trust vs. Global X MSCI | First Trust vs. Global X Alternative | First Trust vs. iShares AsiaPacific Dividend |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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