Correlation Between First Trust and IShares India
Can any of the company-specific risk be diversified away by investing in both First Trust and IShares India 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 India into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Indxx and iShares India Index, you can compare the effects of market volatilities on First Trust and IShares India 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 India. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and IShares India.
Diversification Opportunities for First Trust and IShares India
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and IShares is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Indxx and iShares India Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares India Index 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 Indxx are associated (or correlated) with IShares India. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares India Index has no effect on the direction of First Trust i.e., First Trust and IShares India go up and down completely randomly.
Pair Corralation between First Trust and IShares India
Assuming the 90 days trading horizon First Trust Indxx is expected to generate 0.68 times more return on investment than IShares India. However, First Trust Indxx is 1.47 times less risky than IShares India. It trades about 0.12 of its potential returns per unit of risk. iShares India Index is currently generating about 0.07 per unit of risk. If you would invest 972.00 in First Trust Indxx on September 12, 2024 and sell it today you would earn a total of 181.00 from holding First Trust Indxx or generate 18.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Indxx vs. iShares India Index
Performance |
| Timeline |
| First Trust Indxx |
| iShares India Index |
First Trust and IShares India Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and IShares India
The main advantage of trading using opposite First Trust and IShares India positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, IShares India 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 India will offset losses from the drop in IShares India's long position.| First Trust vs. First Trust Indxx | First Trust vs. First Trust Senior | First Trust vs. First Trust AlphaDEX | First Trust vs. First Trust Indxx |
| IShares India vs. BMO MSCI India | IShares India vs. CI WisdomTree Japan | IShares India vs. BMO Aggregate Bond | IShares India vs. iShares Canadian HYBrid |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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