Correlation Between First Trust and IShares Global
Can any of the company-specific risk be diversified away by investing in both First Trust and IShares Global 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 Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Senior and iShares Global Healthcare, you can compare the effects of market volatilities on First Trust and IShares Global 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 Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and IShares Global.
Diversification Opportunities for First Trust and IShares Global
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between First and IShares is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Senior and iShares Global Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Global Healthcare 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 Senior are associated (or correlated) with IShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Global Healthcare has no effect on the direction of First Trust i.e., First Trust and IShares Global go up and down completely randomly.
Pair Corralation between First Trust and IShares Global
Assuming the 90 days trading horizon First Trust Senior is expected to generate 1.23 times more return on investment than IShares Global. However, First Trust is 1.23 times more volatile than iShares Global Healthcare. It trades about 0.04 of its potential returns per unit of risk. iShares Global Healthcare is currently generating about -0.24 per unit of risk. If you would invest 1,690 in First Trust Senior on September 12, 2024 and sell it today you would earn a total of 11.00 from holding First Trust Senior or generate 0.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Senior vs. iShares Global Healthcare
Performance |
| Timeline |
| First Trust Senior |
| iShares Global Healthcare |
First Trust and IShares Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and IShares Global
The main advantage of trading using opposite First Trust and IShares Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, IShares Global 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 Global will offset losses from the drop in IShares Global's long position.| First Trust vs. First Trust Global | First Trust vs. FT AlphaDEX Industrials | First Trust vs. First Trust Value | First Trust vs. Global X Active |
| IShares Global vs. First Trust AlphaDEX | IShares Global vs. FT AlphaDEX Industrials | IShares Global vs. BMO SPTSX Equal | IShares Global vs. First Trust Senior |
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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |