Correlation Between First Trust and IShares Russell
Can any of the company-specific risk be diversified away by investing in both First Trust and IShares Russell 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 Russell into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Value and iShares Russell 1000, you can compare the effects of market volatilities on First Trust and IShares Russell 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 Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and IShares Russell.
Diversification Opportunities for First Trust and IShares Russell
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and IShares is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Value and iShares Russell 1000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Russell 1000 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 Value are associated (or correlated) with IShares Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Russell 1000 has no effect on the direction of First Trust i.e., First Trust and IShares Russell go up and down completely randomly.
Pair Corralation between First Trust and IShares Russell
Considering the 90-day investment horizon First Trust Value is expected to generate 0.92 times more return on investment than IShares Russell. However, First Trust Value is 1.08 times less risky than IShares Russell. It trades about -0.05 of its potential returns per unit of risk. iShares Russell 1000 is currently generating about -0.07 per unit of risk. If you would invest 4,141 in First Trust Value on January 25, 2024 and sell it today you would lose (37.00) from holding First Trust Value or give up 0.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Value vs. iShares Russell 1000
Performance |
| Timeline |
| First Trust Value |
| iShares Russell 1000 |
First Trust and IShares Russell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and IShares Russell
The main advantage of trading using opposite First Trust and IShares Russell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, IShares Russell 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 Russell will offset losses from the drop in IShares Russell's long position.| First Trust vs. Hartford Multifactor Emerging | First Trust vs. Hartford Multifactor Developed | First Trust vs. iShares Equity Factor | First Trust vs. SPDR MSCI USA |
| IShares Russell vs. Hartford Multifactor Emerging | IShares Russell vs. Hartford Multifactor Developed | IShares Russell vs. iShares Equity Factor | IShares Russell vs. SPDR MSCI USA |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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