Correlation Between First Trust and IShares 5
Can any of the company-specific risk be diversified away by investing in both First Trust and IShares 5 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 First Trust and IShares 5 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Low and iShares 5 10 Year, you can compare the effects of market volatilities on First Trust and IShares 5 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 First Trust with a short position of IShares 5. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and IShares 5.
Diversification Opportunities for First Trust and IShares 5
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and IShares is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Low and iShares 5 10 Year in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares 5 10 and First 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 First Trust Low are associated (or correlated) with IShares 5. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares 5 10 has no effect on the direction of First Trust i.e., First Trust and IShares 5 go up and down completely randomly.
Pair Corralation between First Trust and IShares 5
Given the investment horizon of 90 days First Trust is expected to generate 1.5 times less return on investment than IShares 5. But when comparing it to its historical volatility, First Trust Low is 2.0 times less risky than IShares 5. It trades about 0.16 of its potential returns per unit of risk. iShares 5 10 Year is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 5,022 in iShares 5 10 Year on September 1, 2024 and sell it today you would earn a total of 251.00 from holding iShares 5 10 Year or generate 5.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Low vs. iShares 5 10 Year
Performance |
| Timeline |
| First Trust Low |
| iShares 5 10 |
First Trust and IShares 5 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and IShares 5
The main advantage of trading using opposite First Trust and IShares 5 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, IShares 5 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 IShares 5 will offset losses from the drop in IShares 5's long position.| First Trust vs. Vanguard Intermediate Term Corporate | First Trust vs. Vanguard Short Term Bond | First Trust vs. Vanguard Long Term Corporate | First Trust vs. Vanguard Short Term Treasury |
| IShares 5 vs. iShares ESG USD | IShares 5 vs. FlexShares Disciplined Duration | IShares 5 vs. iShares ESG 1 5 | IShares 5 vs. First Trust Emerging |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |