Correlation Between IShares Expanded and First Trust
Can any of the company-specific risk be diversified away by investing in both IShares Expanded 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 Expanded 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 Expanded Tech Software and First Trust Growth, you can compare the effects of market volatilities on IShares Expanded 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 Expanded with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Expanded and First Trust.
Diversification Opportunities for IShares Expanded and First Trust
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and First is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding iShares Expanded Tech Software and First Trust Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Growth and IShares Expanded 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 Expanded Tech Software 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 Growth has no effect on the direction of IShares Expanded i.e., IShares Expanded and First Trust go up and down completely randomly.
Pair Corralation between IShares Expanded and First Trust
Considering the 90-day investment horizon iShares Expanded Tech Software is expected to generate 1.97 times more return on investment than First Trust. However, IShares Expanded is 1.97 times more volatile than First Trust Growth. It trades about -0.09 of its potential returns per unit of risk. First Trust Growth is currently generating about -0.27 per unit of risk. If you would invest 10,213 in iShares Expanded Tech Software on November 28, 2024 and sell it today you would lose (327.00) from holding iShares Expanded Tech Software or give up 3.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
iShares Expanded Tech Software vs. First Trust Growth
Performance |
| Timeline |
| iShares Expanded Tech |
| First Trust Growth |
IShares Expanded and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Expanded and First Trust
The main advantage of trading using opposite IShares Expanded and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Expanded 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 Expanded vs. Ultimus Managers Trust | IShares Expanded vs. American Beacon Select | IShares Expanded vs. First Trust Indxx | IShares Expanded vs. Direxion Daily Regional |
| First Trust vs. FT Vest Equity | First Trust vs. Northern Lights | First Trust vs. Dimensional International High | First Trust vs. First Trust Exchange Traded |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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