Correlation Between First Trust and IShares Future
Can any of the company-specific risk be diversified away by investing in both First Trust and IShares Future 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 Future into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Dow and iShares Future AI, you can compare the effects of market volatilities on First Trust and IShares Future 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 Future. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and IShares Future.
Diversification Opportunities for First Trust and IShares Future
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and IShares is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Dow and iShares Future AI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Future AI 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 Dow are associated (or correlated) with IShares Future. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Future AI has no effect on the direction of First Trust i.e., First Trust and IShares Future go up and down completely randomly.
Pair Corralation between First Trust and IShares Future
Considering the 90-day investment horizon First Trust Dow is expected to generate 0.54 times more return on investment than IShares Future. However, First Trust Dow is 1.85 times less risky than IShares Future. It trades about -0.27 of its potential returns per unit of risk. iShares Future AI is currently generating about -0.24 per unit of risk. If you would invest 26,227 in First Trust Dow on December 4, 2024 and sell it today you would lose (1,594) from holding First Trust Dow or give up 6.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Dow vs. iShares Future AI
Performance |
| Timeline |
| First Trust Dow |
| iShares Future AI |
First Trust and IShares Future Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and IShares Future
The main advantage of trading using opposite First Trust and IShares Future positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, IShares Future 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 Future will offset losses from the drop in IShares Future's long position.| First Trust vs. First Trust Cloud | First Trust vs. iShares Expanded Tech Software | First Trust vs. Invesco NASDAQ Internet | First Trust vs. First Trust NASDAQ 100 Technology |
| IShares Future vs. Strategy Shares | IShares Future vs. Freedom Day Dividend | IShares Future vs. Franklin Templeton ETF | IShares Future vs. iShares MSCI China |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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