Correlation Between First Asset and IShares Global
Can any of the company-specific risk be diversified away by investing in both First Asset and IShares Global 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 Asset and IShares Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Asset Tech and iShares Global Agriculture, you can compare the effects of market volatilities on First Asset and IShares Global 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 Asset with a short position of IShares Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Asset and IShares Global.
Diversification Opportunities for First Asset and IShares Global
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and IShares is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding First Asset Tech and iShares Global Agriculture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Global Agric and First Asset 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 Asset Tech are associated (or correlated) with IShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Global Agric has no effect on the direction of First Asset i.e., First Asset and IShares Global go up and down completely randomly.
Pair Corralation between First Asset and IShares Global
Assuming the 90 days trading horizon First Asset is expected to generate 1.93 times less return on investment than IShares Global. In addition to that, First Asset is 1.31 times more volatile than iShares Global Agriculture. It trades about 0.14 of its total potential returns per unit of risk. iShares Global Agriculture is currently generating about 0.35 per unit of volatility. If you would invest 6,394 in iShares Global Agriculture on September 1, 2024 and sell it today you would earn a total of 453.00 from holding iShares Global Agriculture or generate 7.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
First Asset Tech vs. iShares Global Agriculture
Performance |
| Timeline |
| First Asset Tech |
| iShares Global Agric |
First Asset and IShares Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Asset and IShares Global
The main advantage of trading using opposite First Asset and IShares Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Asset position performs unexpectedly, IShares Global 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 Global will offset losses from the drop in IShares Global's long position.| First Asset vs. First Asset Energy | First Asset vs. CI Gold Giants | First Asset vs. Harvest Healthcare Leaders | First Asset vs. Hamilton Enhanced Multi Sector |
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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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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