Correlation Between IShares and First Trust
Can any of the company-specific risk be diversified away by investing in both IShares 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 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 and First Trust Japan, you can compare the effects of market volatilities on IShares 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 with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares and First Trust.
Diversification Opportunities for IShares and First Trust
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between IShares and First is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding IShares and First Trust Japan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Japan and IShares 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 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 Japan has no effect on the direction of IShares i.e., IShares and First Trust go up and down completely randomly.
Pair Corralation between IShares and First Trust
If you would invest 5,169 in First Trust Japan on September 3, 2024 and sell it today you would earn a total of 148.00 from holding First Trust Japan or generate 2.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 5.0% |
| Values | Daily Returns |
IShares vs. First Trust Japan
Performance |
| Timeline |
| IShares |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| First Trust Japan |
IShares and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares and First Trust
The main advantage of trading using opposite IShares and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares 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 vs. iShares MSCI Malaysia | IShares vs. iShares MSCI Hong | IShares vs. iShares MSCI Australia | IShares vs. iShares MSCI Taiwan |
| First Trust vs. First Trust United | First Trust vs. First Trust Asia | First Trust vs. First Trust Germany | First Trust vs. First Trust Switzerland |
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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