Correlation Between IShares 20 and First Trust
Can any of the company-specific risk be diversified away by investing in both IShares 20 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 20 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 20 Year and First Trust Long, you can compare the effects of market volatilities on IShares 20 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 20 with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares 20 and First Trust.
Diversification Opportunities for IShares 20 and First Trust
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between IShares and First is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding iShares 20 Year and First Trust Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Long and IShares 20 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 20 Year 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 Long has no effect on the direction of IShares 20 i.e., IShares 20 and First Trust go up and down completely randomly.
Pair Corralation between IShares 20 and First Trust
Considering the 90-day investment horizon iShares 20 Year is expected to under-perform the First Trust. In addition to that, IShares 20 is 1.62 times more volatile than First Trust Long. It trades about -0.01 of its total potential returns per unit of risk. First Trust Long is currently generating about 0.01 per unit of volatility. If you would invest 2,131 in First Trust Long on August 30, 2024 and sell it today you would earn a total of 14.00 from holding First Trust Long or generate 0.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares 20 Year vs. First Trust Long
Performance |
| Timeline |
| iShares 20 Year |
| First Trust Long |
IShares 20 and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares 20 and First Trust
The main advantage of trading using opposite IShares 20 and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares 20 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 20 vs. iShares 7 10 Year | IShares 20 vs. iShares 1 3 Year | IShares 20 vs. iShares Russell 2000 | IShares 20 vs. iShares iBoxx Investment |
| First Trust vs. SPDR Barclays Short | First Trust vs. SPDR Portfolio Intermediate | First Trust vs. SPDR Barclays Long | First Trust vs. SPDR Barclays Intermediate |
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.
Other Complementary Tools
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |