Correlation Between IShares SPTSX and First Trust
Can any of the company-specific risk be diversified away by investing in both IShares SPTSX 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 SPTSX 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 SPTSX 60 and First Trust Global, you can compare the effects of market volatilities on IShares SPTSX 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 SPTSX with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares SPTSX and First Trust.
Diversification Opportunities for IShares SPTSX and First Trust
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and First is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding iShares SPTSX 60 and First Trust Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Global and IShares SPTSX 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 SPTSX 60 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 Global has no effect on the direction of IShares SPTSX i.e., IShares SPTSX and First Trust go up and down completely randomly.
Pair Corralation between IShares SPTSX and First Trust
Assuming the 90 days trading horizon iShares SPTSX 60 is expected to under-perform the First Trust. In addition to that, IShares SPTSX is 1.5 times more volatile than First Trust Global. It trades about -0.03 of its total potential returns per unit of risk. First Trust Global is currently generating about 0.05 per unit of volatility. If you would invest 1,771 in First Trust Global on December 2, 2024 and sell it today you would earn a total of 8.00 from holding First Trust Global or generate 0.45% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
iShares SPTSX 60 vs. First Trust Global
Performance |
Timeline |
iShares SPTSX 60 |
First Trust Global |
IShares SPTSX and First Trust Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with IShares SPTSX and First Trust
The main advantage of trading using opposite IShares SPTSX and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares SPTSX 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.IShares SPTSX vs. iShares Core SP | IShares SPTSX vs. iShares Core SPTSX | IShares SPTSX vs. iShares SPTSX Capped | IShares SPTSX vs. iShares SPTSX Capped |
First Trust vs. First Trust Senior | First Trust vs. First Trust Value | First Trust vs. FT AlphaDEX Industrials | First Trust vs. Global X Active |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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