Correlation Between First Trust and IShares Energy
Can any of the company-specific risk be diversified away by investing in both First Trust and IShares Energy 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 Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust TCW and iShares Energy ETF, you can compare the effects of market volatilities on First Trust and IShares Energy 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 Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and IShares Energy.
Diversification Opportunities for First Trust and IShares Energy
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between First and IShares is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding First Trust TCW and iShares Energy ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Energy ETF 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 TCW are associated (or correlated) with IShares Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Energy ETF has no effect on the direction of First Trust i.e., First Trust and IShares Energy go up and down completely randomly.
Pair Corralation between First Trust and IShares Energy
If you would invest 2,328 in First Trust TCW on August 27, 2024 and sell it today you would earn a total of 136.00 from holding First Trust TCW or generate 5.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
First Trust TCW vs. iShares Energy ETF
Performance |
| Timeline |
| First Trust TCW |
| iShares Energy ETF |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
First Trust and IShares Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and IShares Energy
The main advantage of trading using opposite First Trust and IShares Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, IShares Energy 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 Energy will offset losses from the drop in IShares Energy's long position.| First Trust vs. First Trust TCW | First Trust vs. First Trust Low | First Trust vs. First Trust Enhanced | First Trust vs. First Trust Senior |
| IShares Energy vs. iShares Basic Materials | IShares Energy vs. iShares Utilities ETF | IShares Energy vs. iShares Healthcare ETF | IShares Energy vs. iShares Global Energy |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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