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 Cloud, 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
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between IShares and First is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding iShares Expanded Tech Software and First Trust Cloud in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Cloud 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 Cloud 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 is expected to generate 1.05 times less return on investment than First Trust. But when comparing it to its historical volatility, iShares Expanded Tech Software is 1.06 times less risky than First Trust. It trades about 0.19 of its potential returns per unit of risk. First Trust Cloud is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 8,946 in First Trust Cloud on August 30, 2024 and sell it today you would earn a total of 3,201 from holding First Trust Cloud or generate 35.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Expanded Tech Software vs. First Trust Cloud
Performance |
| Timeline |
| iShares Expanded Tech |
| First Trust Cloud |
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. First Trust Exchange Traded | IShares Expanded vs. Ultimus Managers Trust | IShares Expanded vs. Horizon Kinetics Medical | IShares Expanded vs. Harbor Health Care |
| First Trust vs. Global X Cloud | First Trust vs. WisdomTree Cloud Computing | First Trust vs. First Trust NASDAQ | First Trust vs. First Trust Dow |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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