Correlation Between IShares Global and First Trust
Can any of the company-specific risk be diversified away by investing in both IShares Global 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 Global 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 Global Comm and First Trust S Network, you can compare the effects of market volatilities on IShares Global 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 Global with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Global and First Trust.
Diversification Opportunities for IShares Global and First Trust
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and First is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding iShares Global Comm and First Trust S Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust S and IShares Global 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 Global Comm 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 S has no effect on the direction of IShares Global i.e., IShares Global and First Trust go up and down completely randomly.
Pair Corralation between IShares Global and First Trust
Considering the 90-day investment horizon iShares Global Comm is expected to generate 0.84 times more return on investment than First Trust. However, iShares Global Comm is 1.19 times less risky than First Trust. It trades about 0.11 of its potential returns per unit of risk. First Trust S Network is currently generating about 0.07 per unit of risk. If you would invest 5,628 in iShares Global Comm on August 23, 2024 and sell it today you would earn a total of 4,022 from holding iShares Global Comm or generate 71.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Global Comm vs. First Trust S Network
Performance |
| Timeline |
| iShares Global Comm |
| First Trust S |
IShares Global and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Global and First Trust
The main advantage of trading using opposite IShares Global and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Global 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 Global vs. iShares Global Financials | IShares Global vs. iShares Global Tech | IShares Global vs. iShares Global Healthcare | IShares Global vs. iShares Telecommunications ETF |
| First Trust vs. First Trust Exchange Traded | First Trust vs. First Trust S Network | First Trust vs. First Trust Expanded | First Trust vs. First Trust Indxx |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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