Correlation Between First Trust and IShares Ethereum

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

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

Diversification Opportunities for First Trust and IShares Ethereum

0.36

Correlation Coefficient

First Trust  IShares Ethereum

Weak diversification

The 3 months correlation between First and IShares is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Indxx and iShares Ethereum Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Ethereum Trust 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 Indxx are associated (or correlated) with IShares Ethereum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Ethereum Trust has no effect on the direction of First Trust i.e., First Trust and IShares Ethereum go up and down completely randomly.

Pair Corralation between First Trust and IShares Ethereum

Given the investment horizon of 90 days First Trust Indxx is expected to under-perform the IShares Ethereum. But the etf apears to be less risky and, when comparing its historical volatility, First Trust Indxx is 5.93 times less risky than IShares Ethereum. The etf trades about -0.07 of its potential returns per unit of risk. The iShares Ethereum Trust is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,988  in iShares Ethereum Trust on October 13, 2024 and sell it today you would earn a total of  481.00  from holding iShares Ethereum Trust or generate 24.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

First Trust Indxx  vs.  iShares Ethereum Trust

First Trust Indxx

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Trust Indxx has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, First Trust is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

iShares Ethereum Trust

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Ethereum Trust are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent technical indicators, IShares Ethereum sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First Trust and IShares Ethereum

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

The idea behind First Trust Indxx and iShares Ethereum Trust 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.

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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.