Correlation Between IShares Short and First Trust
Can any of the company-specific risk be diversified away by investing in both IShares Short 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 Short 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 Short Maturity and First Trust Enhanced, you can compare the effects of market volatilities on IShares Short 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 Short with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Short and First Trust.
Diversification Opportunities for IShares Short and First Trust
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and First is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding iShares Short Maturity and First Trust Enhanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Enhanced and IShares Short 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 Short Maturity 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 Enhanced has no effect on the direction of IShares Short i.e., IShares Short and First Trust go up and down completely randomly.
Pair Corralation between IShares Short and First Trust
Given the investment horizon of 90 days iShares Short Maturity is expected to under-perform the First Trust. In addition to that, IShares Short is 3.87 times more volatile than First Trust Enhanced. It trades about -0.04 of its total potential returns per unit of risk. First Trust Enhanced is currently generating about 0.36 per unit of volatility. If you would invest 5,952 in First Trust Enhanced on January 19, 2024 and sell it today you would earn a total of 16.00 from holding First Trust Enhanced or generate 0.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Short Maturity vs. First Trust Enhanced
Performance |
| Timeline |
| iShares Short Maturity |
| First Trust Enhanced |
IShares Short and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Short and First Trust
The main advantage of trading using opposite IShares Short and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Short 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 Short vs. Invesco Ultra Short | IShares Short vs. iShares Ultra Short Term | IShares Short vs. PIMCO Enhanced Short | IShares Short vs. iShares Floating Rate |
| First Trust vs. First Trust Low | First Trust vs. First Trust Senior | First Trust vs. First Trust TCW | First Trust vs. First Trust Tactical |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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