Correlation Between First Asset and IShares SP

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

By analyzing existing cross correlation between First Asset Energy and iShares SP Global, you can compare the effects of market volatilities on First Asset and IShares SP 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 Asset with a short position of IShares SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Asset and IShares SP.

Diversification Opportunities for First Asset and IShares SP

-0.55

Correlation Coefficient

First Asset  IShares SP

Excellent diversification

The 3 months correlation between First and IShares is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding First Asset Energy and iShares SP Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares SP Global and First Asset 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 Asset Energy are associated (or correlated) with IShares SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares SP Global has no effect on the direction of First Asset i.e., First Asset and IShares SP go up and down completely randomly.

Pair Corralation between First Asset and IShares SP

Assuming the 90 days trading horizon First Asset Energy is expected to under-perform the IShares SP. In addition to that, First Asset is 1.21 times more volatile than iShares SP Global. It trades about -0.13 of its total potential returns per unit of risk. iShares SP Global is currently generating about 0.2 per unit of volatility. If you would invest  5,410  in iShares SP Global on September 22, 2024 and sell it today you would earn a total of  672.00  from holding iShares SP Global or generate 12.42% return on investment over 90 days.

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

First Asset Energy  vs.  iShares SP Global

First Asset Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Asset Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Etf's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

iShares SP Global

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares SP Global are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, IShares SP may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with First Asset and IShares SP

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

The idea behind First Asset Energy and iShares SP Global 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.