Correlation Between First Asset and IShares Core

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

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

Diversification Opportunities for First Asset and IShares Core

0.14

Correlation Coefficient

First Asset  IShares Core

Average diversification

The 3 months correlation between First and IShares is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding First Asset Tech and iShares Core Conservative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core Conservative 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 Tech are associated (or correlated) with IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core Conservative has no effect on the direction of First Asset i.e., First Asset and IShares Core go up and down completely randomly.

Pair Corralation between First Asset and IShares Core

Assuming the 90 days trading horizon First Asset Tech is expected to under-perform the IShares Core. In addition to that, First Asset is 4.7 times more volatile than iShares Core Conservative. It trades about -0.1 of its total potential returns per unit of risk. iShares Core Conservative is currently generating about 0.04 per unit of volatility. If you would invest  2,335  in iShares Core Conservative on December 30, 2024 and sell it today you would earn a total of  20.00  from holding iShares Core Conservative or generate 0.86% return on investment over 90 days.

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

First Asset Tech  vs.  iShares Core Conservative

First Asset Tech

Risk-Adjusted Performance

Very Weak

Over the last 90 days First Asset Tech 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 Core Conservative

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core Conservative are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, IShares Core is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with First Asset and IShares Core

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

The idea behind First Asset Tech and iShares Core Conservative 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..