Correlation Between IREIT MarketVector and First Trust
Can any of the company-specific risk be diversified away by investing in both IREIT MarketVector 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 IREIT MarketVector and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iREIT MarketVector and First Trust Senior, you can compare the effects of market volatilities on IREIT MarketVector 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 IREIT MarketVector with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of IREIT MarketVector and First Trust.
Diversification Opportunities for IREIT MarketVector and First Trust
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IREIT and First is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding iREIT MarketVector and First Trust Senior in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Senior and IREIT MarketVector 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 iREIT MarketVector 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 Senior has no effect on the direction of IREIT MarketVector i.e., IREIT MarketVector and First Trust go up and down completely randomly.
Pair Corralation between IREIT MarketVector and First Trust
Given the investment horizon of 90 days iREIT MarketVector is expected to generate 19.67 times more return on investment than First Trust. However, IREIT MarketVector is 19.67 times more volatile than First Trust Senior. It trades about 0.07 of its potential returns per unit of risk. First Trust Senior is currently generating about 0.37 per unit of risk. If you would invest 1,890 in iREIT MarketVector on May 28, 2025 and sell it today you would earn a total of 31.00 from holding iREIT MarketVector or generate 1.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iREIT MarketVector vs. First Trust Senior
Performance |
| Timeline |
| iREIT MarketVector |
| First Trust Senior |
IREIT MarketVector and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IREIT MarketVector and First Trust
The main advantage of trading using opposite IREIT MarketVector and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IREIT MarketVector 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.| IREIT MarketVector vs. Vert Global Sustainable | IREIT MarketVector vs. First Trust Exchange Traded | IREIT MarketVector vs. VanEck Mortgage REIT | IREIT MarketVector vs. Vanguard Global ex US |
| First Trust vs. First Trust Tactical | First Trust vs. First Trust Low | First Trust vs. First Trust Enhanced | First Trust vs. First Trust 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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