Correlation Between IShares Environmentally and First Trust
Can any of the company-specific risk be diversified away by investing in both IShares Environmentally 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 Environmentally 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 Environmentally Aware and First Trust Exchange Traded, you can compare the effects of market volatilities on IShares Environmentally 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 Environmentally with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Environmentally and First Trust.
Diversification Opportunities for IShares Environmentally and First Trust
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and First is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding iShares Environmentally Aware and First Trust Exchange Traded in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Exchange and IShares Environmentally 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 Environmentally Aware 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 Exchange has no effect on the direction of IShares Environmentally i.e., IShares Environmentally and First Trust go up and down completely randomly.
Pair Corralation between IShares Environmentally and First Trust
Given the investment horizon of 90 days iShares Environmentally Aware is expected to generate 0.88 times more return on investment than First Trust. However, iShares Environmentally Aware is 1.14 times less risky than First Trust. It trades about 0.01 of its potential returns per unit of risk. First Trust Exchange Traded is currently generating about -0.01 per unit of risk. 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 |
iShares Environmentally Aware vs. First Trust Exchange Traded
Performance |
| Timeline |
| iShares Environmentally |
| First Trust Exchange |
IShares Environmentally and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Environmentally and First Trust
The main advantage of trading using opposite IShares Environmentally and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Environmentally 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.The idea behind iShares Environmentally Aware and First Trust Exchange Traded pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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