Correlation Between First Trust and IShares Conservative
Can any of the company-specific risk be diversified away by investing in both First Trust and IShares Conservative 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 Conservative 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 Conservative Strategic, you can compare the effects of market volatilities on First Trust and IShares Conservative 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 Conservative. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and IShares Conservative.
Diversification Opportunities for First Trust and IShares Conservative
-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 Conservative Strategic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Conservative 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 Conservative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Conservative has no effect on the direction of First Trust i.e., First Trust and IShares Conservative go up and down completely randomly.
Pair Corralation between First Trust and IShares Conservative
Assuming the 90 days trading horizon First Trust Indxx is expected to generate 1.67 times more return on investment than IShares Conservative. However, First Trust is 1.67 times more volatile than iShares Conservative Strategic. It trades about 0.11 of its potential returns per unit of risk. iShares Conservative Strategic is currently generating about 0.07 per unit of risk. If you would invest 900.00 in First Trust Indxx on September 4, 2024 and sell it today you would earn a total of 253.00 from holding First Trust Indxx or generate 28.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
First Trust Indxx vs. iShares Conservative Strategic
Performance |
| Timeline |
| First Trust Indxx |
| iShares Conservative |
First Trust and IShares Conservative Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and IShares Conservative
The main advantage of trading using opposite First Trust and IShares Conservative positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, IShares Conservative 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 Conservative will offset losses from the drop in IShares Conservative's long position.| First Trust vs. International Zeolite Corp | First Trust vs. European Residential Real | First Trust vs. Financial 15 Split | First Trust vs. Rubicon Organics |
| IShares Conservative vs. iShares Conservative Short | IShares Conservative vs. iShares Short Term | IShares Conservative vs. iShares IG Corporate | IShares Conservative vs. iShares Floating Rate |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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