Correlation Between First Trust and IShares
Can any of the company-specific risk be diversified away by investing in both First Trust and IShares 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 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Germany and IShares, you can compare the effects of market volatilities on First Trust and IShares 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. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and IShares.
Diversification Opportunities for First Trust and IShares
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between First and IShares is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Germany and IShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IShares 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 Germany are associated (or correlated) with IShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IShares has no effect on the direction of First Trust i.e., First Trust and IShares go up and down completely randomly.
Pair Corralation between First Trust and IShares
If you would invest 3,845 in First Trust Germany on September 1, 2024 and sell it today you would earn a total of 17.00 from holding First Trust Germany or generate 0.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 4.76% |
| Values | Daily Returns |
First Trust Germany vs. IShares
Performance |
| Timeline |
| First Trust Germany |
| IShares |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
First Trust and IShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and IShares
The main advantage of trading using opposite First Trust and IShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, IShares 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 will offset losses from the drop in IShares' long position.| First Trust vs. First Trust Switzerland | First Trust vs. First Trust United | First Trust vs. First Trust Japan | First Trust vs. First Trust Latin |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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