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 Enhanced 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
0.97 | 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 Enhanced 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 Enhanced 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 is expected to generate 1.55 times less return on investment than IShares IBonds. But when comparing it to its historical volatility, First Trust Enhanced is 3.99 times less risky than IShares IBonds. It trades about 0.51 of its potential returns per unit of risk. iShares iBonds 2026 is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 2,317 in iShares iBonds 2026 on August 30, 2024 and sell it today you would earn a total of 12.00 from holding iShares iBonds 2026 or generate 0.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Enhanced vs. iShares iBonds 2026
Performance |
| Timeline |
| First Trust Enhanced |
| 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 Senior | First Trust vs. First Trust TCW | First Trust vs. First Trust Tactical |
| IShares IBonds vs. iShares iBonds 2025 | IShares IBonds vs. iShares iBonds 2024 | IShares IBonds vs. iShares iBonds 2027 | IShares IBonds vs. iShares Trust |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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