Correlation Between IHIT and First Trust
Can any of the company-specific risk be diversified away by investing in both IHIT 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 IHIT and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IHIT and First Trust High, you can compare the effects of market volatilities on IHIT 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 IHIT with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of IHIT and First Trust.
Diversification Opportunities for IHIT and First Trust
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IHIT and First is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding IHIT and First Trust High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust High and IHIT 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 IHIT 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 High has no effect on the direction of IHIT i.e., IHIT and First Trust go up and down completely randomly.
Pair Corralation between IHIT and First Trust
If you would invest 1,455 in First Trust High on August 25, 2024 and sell it today you would earn a total of 34.00 from holding First Trust High or generate 2.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.55% |
| Values | Daily Returns |
IHIT vs. First Trust High
Performance |
| Timeline |
| IHIT |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| First Trust High |
IHIT and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IHIT and First Trust
The main advantage of trading using opposite IHIT and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IHIT 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.| IHIT vs. MFS Investment Grade | IHIT vs. Eaton Vance National | IHIT vs. Invesco High Income | IHIT vs. Nuveen California Select |
| First Trust vs. Invesco High Income | First Trust vs. MFS Investment Grade | First Trust vs. Eaton Vance National | First Trust vs. DTF Tax Free |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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