Correlation Between First Trust and IShares Fallen
Can any of the company-specific risk be diversified away by investing in both First Trust and IShares Fallen 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 Fallen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust TCW and iShares Fallen Angels, you can compare the effects of market volatilities on First Trust and IShares Fallen 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 Fallen. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and IShares Fallen.
Diversification Opportunities for First Trust and IShares Fallen
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and IShares is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding First Trust TCW and iShares Fallen Angels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Fallen Angels 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 TCW are associated (or correlated) with IShares Fallen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Fallen Angels has no effect on the direction of First Trust i.e., First Trust and IShares Fallen go up and down completely randomly.
Pair Corralation between First Trust and IShares Fallen
Given the investment horizon of 90 days First Trust TCW is expected to under-perform the IShares Fallen. In addition to that, First Trust is 1.32 times more volatile than iShares Fallen Angels. It trades about -0.19 of its total potential returns per unit of risk. iShares Fallen Angels is currently generating about 0.08 per unit of volatility. If you would invest 2,689 in iShares Fallen Angels on August 25, 2024 and sell it today you would earn a total of 13.00 from holding iShares Fallen Angels or generate 0.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust TCW vs. iShares Fallen Angels
Performance |
| Timeline |
| First Trust TCW |
| iShares Fallen Angels |
First Trust and IShares Fallen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and IShares Fallen
The main advantage of trading using opposite First Trust and IShares Fallen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, IShares Fallen 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 Fallen will offset losses from the drop in IShares Fallen's long position.| First Trust vs. First Trust Low | First Trust vs. First Trust Enhanced | First Trust vs. First Trust Tactical | First Trust vs. First Trust Managed |
| IShares Fallen vs. First Trust Senior | IShares Fallen vs. First Trust Low | IShares Fallen vs. First Trust Enhanced | IShares Fallen vs. First Trust TCW |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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