Correlation Between First Trust and IShares Blockchain

Can any of the company-specific risk be diversified away by investing in both First Trust and IShares Blockchain 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 Blockchain into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between First Trust SkyBridge and iShares Blockchain and, you can compare the effects of market volatilities on First Trust and IShares Blockchain 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 Blockchain. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and IShares Blockchain.

Diversification Opportunities for First Trust and IShares Blockchain

0.99

Correlation Coefficient

First Trust  IShares Blockchain

No risk reduction

The 3 months correlation between First and IShares is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding First Trust SkyBridge and iShares Blockchain and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Blockchain and 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 SkyBridge are associated (or correlated) with IShares Blockchain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Blockchain and has no effect on the direction of First Trust i.e., First Trust and IShares Blockchain go up and down completely randomly.

Pair Corralation between First Trust and IShares Blockchain

Given the investment horizon of 90 days First Trust SkyBridge is expected to generate 1.02 times more return on investment than IShares Blockchain. However, First Trust is 1.02 times more volatile than iShares Blockchain and. It trades about -0.03 of its potential returns per unit of risk. iShares Blockchain and is currently generating about -0.04 per unit of risk. If you would invest  1,961  in First Trust SkyBridge on September 22, 2024 and sell it today you would lose (92.00) from holding First Trust SkyBridge or give up 4.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.45%
Values	Daily Returns

First Trust SkyBridge  vs.  iShares Blockchain and

First Trust SkyBridge

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust SkyBridge are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, First Trust unveiled solid returns over the last few months and may actually be approaching a breakup point.

iShares Blockchain and

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Blockchain and are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady essential indicators, IShares Blockchain exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First Trust and IShares Blockchain

The main advantage of trading using opposite First Trust and IShares Blockchain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, IShares Blockchain 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 Blockchain will offset losses from the drop in IShares Blockchain's long position.

The idea behind First Trust SkyBridge and iShares Blockchain and pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.