Correlation Between First Trust and IShares Russell
Can any of the company-specific risk be diversified away by investing in both First Trust and IShares Russell 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 Russell 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 Russell 3000, you can compare the effects of market volatilities on First Trust and IShares Russell 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 Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and IShares Russell.
Diversification Opportunities for First Trust and IShares Russell
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and IShares is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding First Trust SkyBridge and iShares Russell 3000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Russell 3000 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 Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Russell 3000 has no effect on the direction of First Trust i.e., First Trust and IShares Russell go up and down completely randomly.
Pair Corralation between First Trust and IShares Russell
Given the investment horizon of 90 days First Trust SkyBridge is expected to under-perform the IShares Russell. In addition to that, First Trust is 4.57 times more volatile than iShares Russell 3000. It trades about -0.12 of its total potential returns per unit of risk. iShares Russell 3000 is currently generating about -0.04 per unit of volatility. If you would invest 34,573 in iShares Russell 3000 on December 1, 2024 and sell it today you would lose (772.00) from holding iShares Russell 3000 or give up 2.23% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
First Trust SkyBridge vs. iShares Russell 3000
Performance |
Timeline |
First Trust SkyBridge |
iShares Russell 3000 |
First Trust and IShares Russell Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with First Trust and IShares Russell
The main advantage of trading using opposite First Trust and IShares Russell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, IShares Russell 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 Russell will offset losses from the drop in IShares Russell's long position.First Trust vs. VanEck Digital Transformation | First Trust vs. Bitwise Crypto Industry | First Trust vs. Global X Blockchain | First Trust vs. First Trust Indxx |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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