Correlation Between First Trust and IShares Self
Can any of the company-specific risk be diversified away by investing in both First Trust and IShares Self 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 Self into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Exchange Traded and iShares Self Driving EV, you can compare the effects of market volatilities on First Trust and IShares Self 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 Self. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and IShares Self.
Diversification Opportunities for First Trust and IShares Self
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and IShares is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Exchange Traded and iShares Self Driving EV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Self Driving 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 Exchange Traded are associated (or correlated) with IShares Self. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Self Driving has no effect on the direction of First Trust i.e., First Trust and IShares Self go up and down completely randomly.
Pair Corralation between First Trust and IShares Self
Given the investment horizon of 90 days First Trust Exchange Traded is expected to generate 0.56 times more return on investment than IShares Self. However, First Trust Exchange Traded is 1.8 times less risky than IShares Self. It trades about 0.03 of its potential returns per unit of risk. iShares Self Driving EV is currently generating about -0.02 per unit of risk. If you would invest 1,882 in First Trust Exchange Traded on August 30, 2024 and sell it today you would earn a total of 268.00 from holding First Trust Exchange Traded or generate 14.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Exchange Traded vs. iShares Self Driving EV
Performance |
| Timeline |
| First Trust Exchange |
| iShares Self Driving |
First Trust and IShares Self Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and IShares Self
The main advantage of trading using opposite First Trust and IShares Self positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, IShares Self 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 Self will offset losses from the drop in IShares Self's long position.| First Trust vs. First Trust Exchange Traded | First Trust vs. First Trust Expanded | First Trust vs. BlackRock Future Health | First Trust vs. SPDR SP Health |
| IShares Self vs. SPDR SP Kensho | IShares Self vs. KraneShares Electric Vehicles | IShares Self vs. Global X Autonomous | IShares Self vs. Amplify Lithium Battery |
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 Stocks Directory module to find actively traded stocks across global markets.
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