Correlation Between IShares Interest and First Trust
Can any of the company-specific risk be diversified away by investing in both IShares Interest 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 Interest 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 Interest Rate and First Trust Short, you can compare the effects of market volatilities on IShares Interest 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 Interest with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Interest and First Trust.
Diversification Opportunities for IShares Interest and First Trust
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between IShares and First is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding iShares Interest Rate and First Trust Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Short and IShares Interest 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 Interest Rate 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 Short has no effect on the direction of IShares Interest i.e., IShares Interest and First Trust go up and down completely randomly.
Pair Corralation between IShares Interest and First Trust
Given the investment horizon of 90 days iShares Interest Rate is expected to generate 1.62 times more return on investment than First Trust. However, IShares Interest is 1.62 times more volatile than First Trust Short. It trades about 0.2 of its potential returns per unit of risk. First Trust Short is currently generating about 0.01 per unit of risk. If you would invest 9,101 in iShares Interest Rate on August 23, 2024 and sell it today you would earn a total of 215.00 from holding iShares Interest Rate or generate 2.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Interest Rate vs. First Trust Short
Performance |
| Timeline |
| iShares Interest Rate |
| First Trust Short |
IShares Interest and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Interest and First Trust
The main advantage of trading using opposite IShares Interest and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Interest 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 Interest vs. SPDR Bloomberg 1 3 | IShares Interest vs. JPMorgan Ultra Short Income | IShares Interest vs. iShares Ultra Short Term | IShares Interest vs. First Trust Enhanced |
| First Trust vs. iShares Treasury Floating | First Trust vs. iShares Short Term National | First Trust vs. iShares Short Maturity | First Trust vs. iShares Interest Rate |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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