Correlation Between IShares Trust and FT Vest
Can any of the company-specific risk be diversified away by investing in both IShares Trust and FT Vest 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 Trust and FT Vest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Trust and FT Vest Dow, you can compare the effects of market volatilities on IShares Trust and FT Vest 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 Trust with a short position of FT Vest. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Trust and FT Vest.
Diversification Opportunities for IShares Trust and FT Vest
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and FDND is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and FT Vest Dow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FT Vest Dow and IShares Trust 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 Trust are associated (or correlated) with FT Vest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FT Vest Dow has no effect on the direction of IShares Trust i.e., IShares Trust and FT Vest go up and down completely randomly.
Pair Corralation between IShares Trust and FT Vest
Given the investment horizon of 90 days IShares Trust is expected to generate 7.62 times less return on investment than FT Vest. But when comparing it to its historical volatility, iShares Trust is 2.07 times less risky than FT Vest. It trades about 0.1 of its potential returns per unit of risk. FT Vest Dow is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 2,024 in FT Vest Dow on August 26, 2024 and sell it today you would earn a total of 198.00 from holding FT Vest Dow or generate 9.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Trust vs. FT Vest Dow
Performance |
| Timeline |
| iShares Trust |
| FT Vest Dow |
IShares Trust and FT Vest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Trust and FT Vest
The main advantage of trading using opposite IShares Trust and FT Vest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Trust position performs unexpectedly, FT Vest 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 FT Vest will offset losses from the drop in FT Vest's long position.| IShares Trust vs. First Trust Multi Asset | IShares Trust vs. Collaborative Investment Series | IShares Trust vs. Akros Monthly Payout | IShares Trust vs. Northern Lights |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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