Correlation Between First Trust and IShares Expanded
Can any of the company-specific risk be diversified away by investing in both First Trust and IShares Expanded 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 Expanded 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 Expanded Tech Software, you can compare the effects of market volatilities on First Trust and IShares Expanded 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 Expanded. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and IShares Expanded.
Diversification Opportunities for First Trust and IShares Expanded
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and IShares is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Exchange Traded and iShares Expanded Tech Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Expanded Tech 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 Expanded. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Expanded Tech has no effect on the direction of First Trust i.e., First Trust and IShares Expanded go up and down completely randomly.
Pair Corralation between First Trust and IShares Expanded
Given the investment horizon of 90 days First Trust is expected to generate 3.76 times less return on investment than IShares Expanded. But when comparing it to its historical volatility, First Trust Exchange Traded is 1.59 times less risky than IShares Expanded. It trades about 0.04 of its potential returns per unit of risk. iShares Expanded Tech Software is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 8,408 in iShares Expanded Tech Software on August 28, 2024 and sell it today you would earn a total of 2,171 from holding iShares Expanded Tech Software or generate 25.82% 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 Exchange Traded vs. iShares Expanded Tech Software
Performance |
| Timeline |
| First Trust Exchange |
| iShares Expanded Tech |
First Trust and IShares Expanded Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and IShares Expanded
The main advantage of trading using opposite First Trust and IShares Expanded positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, IShares Expanded 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 Expanded will offset losses from the drop in IShares Expanded'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 Expanded vs. First Trust Exchange Traded | IShares Expanded vs. Ultimus Managers Trust | IShares Expanded vs. Horizon Kinetics Medical | IShares Expanded vs. Harbor Health Care |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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