Correlation Between First Trust and IShares ESG
Can any of the company-specific risk be diversified away by investing in both First Trust and IShares ESG 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 ESG 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 ESG 1 5, you can compare the effects of market volatilities on First Trust and IShares ESG 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 ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and IShares ESG.
Diversification Opportunities for First Trust and IShares ESG
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and IShares is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Senior and iShares ESG 1 5 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares ESG 1 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 ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares ESG 1 has no effect on the direction of First Trust i.e., First Trust and IShares ESG go up and down completely randomly.
Pair Corralation between First Trust and IShares ESG
Given the investment horizon of 90 days First Trust Senior is expected to generate 1.14 times more return on investment than IShares ESG. However, First Trust is 1.14 times more volatile than iShares ESG 1 5. It trades about 0.17 of its potential returns per unit of risk. iShares ESG 1 5 is currently generating about 0.06 per unit of risk. If you would invest 4,599 in First Trust Senior on August 30, 2024 and sell it today you would earn a total of 29.00 from holding First Trust Senior or generate 0.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Senior vs. iShares ESG 1 5
Performance |
| Timeline |
| First Trust Senior |
| iShares ESG 1 |
First Trust and IShares ESG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and IShares ESG
The main advantage of trading using opposite First Trust and IShares ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, IShares ESG 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 ESG will offset losses from the drop in IShares ESG's long position.| First Trust vs. First Trust Tactical | First Trust vs. First Trust Low | First Trust vs. First Trust Enhanced | First Trust vs. First Trust Managed |
| IShares ESG vs. VanEck Vectors Moodys | IShares ESG vs. BondBloxx ETF Trust | IShares ESG vs. Vanguard ESG Corporate | IShares ESG vs. Vanguard Intermediate Term Corporate |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| 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 | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |