Correlation Between First Trust and IShares ESG
Can any of the company-specific risk be diversified away by investing in both First Trust and IShares ESG 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 ESG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Emerging and iShares ESG Advanced, you can compare the effects of market volatilities on First Trust and IShares ESG 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 ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and IShares ESG.
Diversification Opportunities for First Trust and IShares ESG
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and IShares is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Emerging and iShares ESG Advanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares ESG Advanced 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 Emerging are associated (or correlated) with IShares ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares ESG Advanced has no effect on the direction of First Trust i.e., First Trust and IShares ESG go up and down completely randomly.
Pair Corralation between First Trust and IShares ESG
Given the investment horizon of 90 days First Trust Emerging is expected to under-perform the IShares ESG. In addition to that, First Trust is 1.27 times more volatile than iShares ESG Advanced. It trades about -0.07 of its total potential returns per unit of risk. iShares ESG Advanced is currently generating about 0.14 per unit of volatility. If you would invest 8,174 in iShares ESG Advanced on September 1, 2024 and sell it today you would earn a total of 133.00 from holding iShares ESG Advanced or generate 1.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
First Trust Emerging vs. iShares ESG Advanced
Performance |
| Timeline |
| First Trust Emerging |
| iShares ESG Advanced |
First Trust and IShares ESG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and IShares ESG
The main advantage of trading using opposite First Trust and IShares ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, IShares ESG 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 ESG will offset losses from the drop in IShares ESG's long position.| First Trust vs. First Trust SSI | First Trust vs. First Trust BuyWrite | First Trust vs. First Trust Managed | First Trust vs. First Trust Tactical |
| IShares ESG vs. iShares ESG USD | IShares ESG vs. FlexShares Disciplined Duration | IShares ESG vs. iShares ESG 1 5 | IShares ESG vs. First Trust Emerging |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
Other Complementary Tools
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |