Correlation Between First Trust and IShares Global
Can any of the company-specific risk be diversified away by investing in both First Trust and IShares Global 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 Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Global and iShares Global Clean, you can compare the effects of market volatilities on First Trust and IShares Global 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 Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and IShares Global.
Diversification Opportunities for First Trust and IShares Global
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 Global and iShares Global Clean in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Global Clean 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 Global are associated (or correlated) with IShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Global Clean has no effect on the direction of First Trust i.e., First Trust and IShares Global go up and down completely randomly.
Pair Corralation between First Trust and IShares Global
Considering the 90-day investment horizon First Trust Global is expected to generate 0.79 times more return on investment than IShares Global. However, First Trust Global is 1.26 times less risky than IShares Global. It trades about -0.02 of its potential returns per unit of risk. iShares Global Clean is currently generating about -0.06 per unit of risk. If you would invest 1,736 in First Trust Global on November 2, 2024 and sell it today you would lose (257.00) from holding First Trust Global or give up 14.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Global vs. iShares Global Clean
Performance |
| Timeline |
| First Trust Global |
| iShares Global Clean |
First Trust and IShares Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and IShares Global
The main advantage of trading using opposite First Trust and IShares Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, IShares Global 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 Global will offset losses from the drop in IShares Global's long position.| First Trust vs. Invesco Global Clean | First Trust vs. Invesco Solar ETF | First Trust vs. First Trust NASDAQ | First Trust vs. Invesco WilderHill Clean |
| IShares Global vs. Invesco Solar ETF | IShares Global vs. First Trust NASDAQ | IShares Global vs. Invesco WilderHill Clean | IShares Global vs. Global X Lithium |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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