Correlation Between IShares Currency and First Trust
Can any of the company-specific risk be diversified away by investing in both IShares Currency and First Trust 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 IShares Currency and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Currency Hedged and First Trust SSI, you can compare the effects of market volatilities on IShares Currency and First Trust 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 IShares Currency with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Currency and First Trust.
Diversification Opportunities for IShares Currency and First Trust
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and First is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding iShares Currency Hedged and First Trust SSI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust SSI and IShares Currency 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 iShares Currency Hedged are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust SSI has no effect on the direction of IShares Currency i.e., IShares Currency and First Trust go up and down completely randomly.
Pair Corralation between IShares Currency and First Trust
Given the investment horizon of 90 days IShares Currency is expected to generate 1.17 times less return on investment than First Trust. In addition to that, IShares Currency is 1.07 times more volatile than First Trust SSI. It trades about 0.11 of its total potential returns per unit of risk. First Trust SSI is currently generating about 0.13 per unit of volatility. If you would invest 3,142 in First Trust SSI on September 3, 2024 and sell it today you would earn a total of 706.00 from holding First Trust SSI or generate 22.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Currency Hedged vs. First Trust SSI
Performance |
| Timeline |
| iShares Currency Hedged |
| First Trust SSI |
IShares Currency and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Currency and First Trust
The main advantage of trading using opposite IShares Currency and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Currency position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| IShares Currency vs. iShares Currency Hedged | IShares Currency vs. iShares Currency Hedged | IShares Currency vs. iShares MSCI Intl | IShares Currency vs. iShares Currency Hedged |
| First Trust vs. First Trust Emerging | First Trust vs. First Trust Managed | First Trust vs. First Trust TCW | First Trust 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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