Correlation Between IShares Global and First Trust
Can any of the company-specific risk be diversified away by investing in both IShares Global 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 Global 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 Global Timber and First Trust Exchange Traded, you can compare the effects of market volatilities on IShares Global 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 Global with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Global and First Trust.
Diversification Opportunities for IShares Global and First Trust
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and First is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding iShares Global Timber 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 Global 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 Global Timber 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 Global i.e., IShares Global and First Trust go up and down completely randomly.
Pair Corralation between IShares Global and First Trust
Given the investment horizon of 90 days iShares Global Timber is expected to under-perform the First Trust. In addition to that, IShares Global is 1.63 times more volatile than First Trust Exchange Traded. It trades about 0.0 of its total potential returns per unit of risk. First Trust Exchange Traded is currently generating about 0.14 per unit of volatility. If you would invest 2,118 in First Trust Exchange Traded on September 1, 2024 and sell it today you would earn a total of 39.00 from holding First Trust Exchange Traded or generate 1.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Global Timber vs. First Trust Exchange Traded
Performance |
| Timeline |
| iShares Global Timber |
| First Trust Exchange |
IShares Global and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Global and First Trust
The main advantage of trading using opposite IShares Global and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Global 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 Global vs. First Trust Exchange Traded | IShares Global vs. Ultimus Managers Trust | IShares Global vs. Horizon Kinetics Medical | IShares Global vs. Harbor Health Care |
| First Trust vs. Fidelity MSCI Financials | First Trust vs. Fidelity MSCI Consumer | First Trust vs. Fidelity MSCI Consumer | First Trust vs. Fidelity MSCI Industrials |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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