Correlation Between First Trust and IShares Floating
Can any of the company-specific risk be diversified away by investing in both First Trust and IShares Floating 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 Floating 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 Floating Rate, you can compare the effects of market volatilities on First Trust and IShares Floating 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 Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and IShares Floating.
Diversification Opportunities for First Trust and IShares Floating
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between First and IShares is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Low and iShares Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Floating Rate 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 Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Floating Rate has no effect on the direction of First Trust i.e., First Trust and IShares Floating go up and down completely randomly.
Pair Corralation between First Trust and IShares Floating
Given the investment horizon of 90 days First Trust is expected to generate 1.36 times less return on investment than IShares Floating. In addition to that, First Trust is 5.75 times more volatile than iShares Floating Rate. It trades about 0.09 of its total potential returns per unit of risk. iShares Floating Rate is currently generating about 0.67 per unit of volatility. If you would invest 5,079 in iShares Floating Rate on August 31, 2024 and sell it today you would earn a total of 26.00 from holding iShares Floating Rate or generate 0.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Low vs. iShares Floating Rate
Performance |
| Timeline |
| First Trust Low |
| iShares Floating Rate |
First Trust and IShares Floating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and IShares Floating
The main advantage of trading using opposite First Trust and IShares Floating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, IShares Floating 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 Floating will offset losses from the drop in IShares Floating's long position.| First Trust vs. FlexShares Disciplined Duration | First Trust vs. Vanguard Mortgage Backed Securities | First Trust vs. Simplify Exchange Traded | First Trust vs. WisdomTree Mortgage Plus |
| IShares Floating vs. SPDR Bloomberg Investment | IShares Floating vs. Invesco Senior Loan | IShares Floating vs. PIMCO Enhanced Short | IShares Floating vs. iShares Short Maturity |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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