Correlation Between First Trust and IShares Interest
Can any of the company-specific risk be diversified away by investing in both First Trust and IShares Interest 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 Interest 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 Interest Rate, you can compare the effects of market volatilities on First Trust and IShares Interest 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 Interest. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and IShares Interest.
Diversification Opportunities for First Trust and IShares Interest
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and IShares is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Low and iShares Interest Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Interest 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 Interest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Interest Rate has no effect on the direction of First Trust i.e., First Trust and IShares Interest go up and down completely randomly.
Pair Corralation between First Trust and IShares Interest
Given the investment horizon of 90 days First Trust is expected to generate 9.22 times less return on investment than IShares Interest. But when comparing it to its historical volatility, First Trust Low is 1.22 times less risky than IShares Interest. It trades about 0.02 of its potential returns per unit of risk. iShares Interest Rate is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 2,418 in iShares Interest Rate on August 28, 2024 and sell it today you would earn a total of 24.00 from holding iShares Interest Rate or generate 0.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Low vs. iShares Interest Rate
Performance |
| Timeline |
| First Trust Low |
| iShares Interest Rate |
First Trust and IShares Interest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and IShares Interest
The main advantage of trading using opposite First Trust and IShares Interest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, IShares Interest 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 Interest will offset losses from the drop in IShares Interest's long position.The idea behind First Trust Low and iShares Interest Rate pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| IShares Interest vs. iShares Interest Rate | IShares Interest vs. iShares Interest Rate | IShares Interest vs. iShares Edge Investment | IShares Interest vs. iShares Inflation Hedged |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
Other Complementary Tools
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |