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 Global and First Trust Financials, 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
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between IShares and First is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI Global and First Trust Financials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Financials 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 Global 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 Financials 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 Global is expected to generate 2.68 times more return on investment than First Trust. However, IShares MSCI is 2.68 times more volatile than First Trust Financials. It trades about 0.14 of its potential returns per unit of risk. First Trust Financials is currently generating about 0.02 per unit of risk. If you would invest 5,583 in iShares MSCI Global on September 3, 2025 and sell it today you would earn a total of 1,487 from holding iShares MSCI Global or generate 26.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares MSCI Global vs. First Trust Financials
Performance |
| Timeline |
| iShares MSCI Global |
| First Trust Financials |
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. Sprott Active Metals | IShares MSCI vs. Direxion Daily Gold | IShares MSCI vs. SPDR SP North | IShares MSCI vs. Xtrackers RREEF Global |
| First Trust vs. Direxion Daily Regional | First Trust vs. iShares MSCI Europe | First Trust vs. First Trust Exchange Traded | First Trust vs. Fidelity MSCI Financials |
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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