Correlation Between First Trust and IShares Bloomberg
Can any of the company-specific risk be diversified away by investing in both First Trust and IShares Bloomberg 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 Bloomberg into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Global and iShares Bloomberg Roll, you can compare the effects of market volatilities on First Trust and IShares Bloomberg 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 Bloomberg. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and IShares Bloomberg.
Diversification Opportunities for First Trust and IShares Bloomberg
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and IShares is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Global and iShares Bloomberg Roll in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Bloomberg Roll 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 Global are associated (or correlated) with IShares Bloomberg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Bloomberg Roll has no effect on the direction of First Trust i.e., First Trust and IShares Bloomberg go up and down completely randomly.
Pair Corralation between First Trust and IShares Bloomberg
Given the investment horizon of 90 days First Trust Global is expected to generate 1.03 times more return on investment than IShares Bloomberg. However, First Trust is 1.03 times more volatile than iShares Bloomberg Roll. It trades about 0.0 of its potential returns per unit of risk. iShares Bloomberg Roll is currently generating about -0.02 per unit of risk. If you would invest 2,371 in First Trust Global on August 29, 2024 and sell it today you would lose (10.00) from holding First Trust Global or give up 0.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Global vs. iShares Bloomberg Roll
Performance |
| Timeline |
| First Trust Global |
| iShares Bloomberg Roll |
First Trust and IShares Bloomberg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and IShares Bloomberg
The main advantage of trading using opposite First Trust and IShares Bloomberg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, IShares Bloomberg 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 Bloomberg will offset losses from the drop in IShares Bloomberg's long position.| First Trust vs. iShares GSCI Commodity | First Trust vs. Invesco Optimum Yield | First Trust vs. First Trust Senior | First Trust vs. First Trust Capital |
| IShares Bloomberg vs. abrdn Bloomberg All | IShares Bloomberg vs. GraniteShares Bloomberg Commodity | IShares Bloomberg vs. iShares GSCI Commodity | IShares Bloomberg vs. abrdn Bloomberg All |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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