Correlation Between IShares Residential and First Trust

Can any of the company-specific risk be diversified away by investing in both IShares Residential 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 Residential 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 Residential and and First Trust SP, you can compare the effects of market volatilities on IShares Residential 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 Residential with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Residential and First Trust.

Diversification Opportunities for IShares Residential and First Trust

0.96

Correlation Coefficient

IShares Residential  First Trust

Almost no diversification

The 3 months correlation between IShares and First is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding iShares Residential and and First Trust SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust SP and IShares Residential 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 Residential and 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 SP has no effect on the direction of IShares Residential i.e., IShares Residential and First Trust go up and down completely randomly.

Pair Corralation between IShares Residential and First Trust

Considering the 90-day investment horizon iShares Residential and is expected to generate 1.11 times more return on investment than First Trust. However, IShares Residential is 1.11 times more volatile than First Trust SP. It trades about 0.01 of its potential returns per unit of risk. First Trust SP is currently generating about -0.03 per unit of risk. If you would invest  8,681  in iShares Residential and on December 2, 2024 and sell it today you would earn a total of  55.00  from holding iShares Residential and or generate 0.63% return on investment over 90 days.

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

iShares Residential and  vs.  First Trust SP

iShares Residential and

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Residential and are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, IShares Residential is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

First Trust SP

Risk-Adjusted Performance

Very Weak

Over the last 90 days First Trust SP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, First Trust is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with IShares Residential and First Trust

The main advantage of trading using opposite IShares Residential and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Residential 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.

The idea behind iShares Residential and and First Trust SP 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..