Correlation Between IShares Latin and First Trust
Can any of the company-specific risk be diversified away by investing in both IShares Latin 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 Latin 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 Latin America and First Trust Brazil, you can compare the effects of market volatilities on IShares Latin 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 Latin with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Latin and First Trust.
Diversification Opportunities for IShares Latin and First Trust
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and First is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding iShares Latin America and First Trust Brazil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Brazil and IShares Latin 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 Latin America 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 Brazil has no effect on the direction of IShares Latin i.e., IShares Latin and First Trust go up and down completely randomly.
Pair Corralation between IShares Latin and First Trust
Considering the 90-day investment horizon iShares Latin America is expected to generate 0.69 times more return on investment than First Trust. However, iShares Latin America is 1.45 times less risky than First Trust. It trades about 0.09 of its potential returns per unit of risk. First Trust Brazil is currently generating about 0.01 per unit of risk. If you would invest 2,218 in iShares Latin America on November 3, 2024 and sell it today you would earn a total of 95.00 from holding iShares Latin America or generate 4.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Latin America vs. First Trust Brazil
Performance |
| Timeline |
| iShares Latin America |
| First Trust Brazil |
IShares Latin and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Latin and First Trust
The main advantage of trading using opposite IShares Latin and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Latin 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 Latin vs. iShares MSCI Mexico | IShares Latin vs. iShares MSCI Pacific | IShares Latin vs. iShares MSCI South | IShares Latin vs. iShares MSCI Brazil |
| First Trust vs. First Trust Latin | First Trust vs. First Trust Germany | First Trust vs. First Trust Japan | First Trust vs. First Trust Asia |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |