Correlation Between IShares MSCI and First Trust
Can any of the company-specific risk be diversified away by investing in both IShares MSCI 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 MSCI 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 MSCI India and First Trust Managed, you can compare the effects of market volatilities on IShares MSCI 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 MSCI with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and First Trust.
Diversification Opportunities for IShares MSCI and First Trust
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and First is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI India and First Trust Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Managed and IShares MSCI 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 MSCI India 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 Managed has no effect on the direction of IShares MSCI i.e., IShares MSCI and First Trust go up and down completely randomly.
Pair Corralation between IShares MSCI and First Trust
Given the investment horizon of 90 days iShares MSCI India is expected to generate 2.47 times more return on investment than First Trust. However, IShares MSCI is 2.47 times more volatile than First Trust Managed. It trades about 0.16 of its potential returns per unit of risk. First Trust Managed is currently generating about -0.05 per unit of risk. If you would invest 4,836 in iShares MSCI India on March 10, 2025 and sell it today you would earn a total of 655.00 from holding iShares MSCI India or generate 13.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares MSCI India vs. First Trust Managed
Performance |
| Timeline |
| iShares MSCI India |
| First Trust Managed |
IShares MSCI and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and First Trust
The main advantage of trading using opposite IShares MSCI and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI 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 MSCI vs. iShares India 50 | IShares MSCI vs. iShares MSCI China | IShares MSCI vs. VanEck Vietnam ETF | IShares MSCI vs. WisdomTree India Earnings |
| First Trust vs. WisdomTree Managed Futures | First Trust vs. First Trust LongShort | First Trust vs. First Trust Alternative | First Trust vs. iMGP DBi Managed |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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