Correlation Between First Asset and IShares SP
Can any of the company-specific risk be diversified away by investing in both First Asset and IShares SP 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 SP 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 SP Global, you can compare the effects of market volatilities on First Asset and IShares SP 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 SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Asset and IShares SP.
Diversification Opportunities for First Asset and IShares SP
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and IShares is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding First Asset Tech and iShares SP Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares SP Global 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 SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares SP Global has no effect on the direction of First Asset i.e., First Asset and IShares SP go up and down completely randomly.
Pair Corralation between First Asset and IShares SP
Assuming the 90 days trading horizon First Asset Tech is expected to generate 1.23 times more return on investment than IShares SP. However, First Asset is 1.23 times more volatile than iShares SP Global. It trades about 0.09 of its potential returns per unit of risk. iShares SP Global is currently generating about 0.06 per unit of risk. If you would invest 1,559 in First Asset Tech on September 12, 2024 and sell it today you would earn a total of 636.00 from holding First Asset Tech or generate 40.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.72% |
| Values | Daily Returns |
First Asset Tech vs. iShares SP Global
Performance |
| Timeline |
| First Asset Tech |
| iShares SP Global |
First Asset and IShares SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Asset and IShares SP
The main advantage of trading using opposite First Asset and IShares SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Asset position performs unexpectedly, IShares SP 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 SP will offset losses from the drop in IShares SP'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 |
| IShares SP vs. iShares SP Global | IShares SP vs. iShares SPTSX Capped | IShares SP vs. iShares Global Healthcare | IShares SP vs. iShares Global Infrastructure |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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