Correlation Between First Trust and IShares IBonds
Can any of the company-specific risk be diversified away by investing in both First Trust and IShares IBonds 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 IBonds 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 iBonds 2026, you can compare the effects of market volatilities on First Trust and IShares IBonds 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 IBonds. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and IShares IBonds.
Diversification Opportunities for First Trust and IShares IBonds
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between First and IShares is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding First Trust TCW and iShares iBonds 2026 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares iBonds 2026 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 IBonds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares iBonds 2026 has no effect on the direction of First Trust i.e., First Trust and IShares IBonds go up and down completely randomly.
Pair Corralation between First Trust and IShares IBonds
Given the investment horizon of 90 days First Trust TCW is expected to under-perform the IShares IBonds. In addition to that, First Trust is 2.62 times more volatile than iShares iBonds 2026. It trades about -0.15 of its total potential returns per unit of risk. iShares iBonds 2026 is currently generating about 0.21 per unit of volatility. If you would invest 2,310 in iShares iBonds 2026 on August 26, 2024 and sell it today you would earn a total of 14.00 from holding iShares iBonds 2026 or generate 0.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust TCW vs. iShares iBonds 2026
Performance |
| Timeline |
| First Trust TCW |
| iShares iBonds 2026 |
First Trust and IShares IBonds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and IShares IBonds
The main advantage of trading using opposite First Trust and IShares IBonds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, IShares IBonds 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 IBonds will offset losses from the drop in IShares IBonds' 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 IBonds vs. First Trust Senior | IShares IBonds vs. First Trust Low | IShares IBonds vs. First Trust Enhanced | IShares IBonds 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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