Correlation Between IShares New and First Trust
Can any of the company-specific risk be diversified away by investing in both IShares New 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 New 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 New York and First Trust Exchange Traded, you can compare the effects of market volatilities on IShares New 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 New with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares New and First Trust.
Diversification Opportunities for IShares New and First Trust
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and First is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding iShares New York and First Trust Exchange Traded in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Exchange and IShares New 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 New York 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 Exchange has no effect on the direction of IShares New i.e., IShares New and First Trust go up and down completely randomly.
Pair Corralation between IShares New and First Trust
Considering the 90-day investment horizon iShares New York is expected to generate 1.39 times more return on investment than First Trust. However, IShares New is 1.39 times more volatile than First Trust Exchange Traded. It trades about 0.1 of its potential returns per unit of risk. First Trust Exchange Traded is currently generating about 0.13 per unit of risk. If you would invest 5,302 in iShares New York on October 24, 2024 and sell it today you would earn a total of 23.00 from holding iShares New York or generate 0.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares New York vs. First Trust Exchange Traded
Performance |
| Timeline |
| iShares New York |
| First Trust Exchange |
IShares New and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares New and First Trust
The main advantage of trading using opposite IShares New and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares New 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 New vs. iShares California Muni | IShares New vs. iShares Intermediate GovernmentCredit | IShares New vs. Invesco New York | IShares New vs. iShares Agency Bond |
| First Trust vs. First Trust Ultra | First Trust vs. First Trust Short | First Trust vs. First Trust Municipal | First Trust vs. First Trust Managed |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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