Correlation Between First Trust and IShares Technology

Can any of the company-specific risk be diversified away by investing in both First Trust and IShares Technology 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 Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between First Trust Technology and iShares Technology ETF, you can compare the effects of market volatilities on First Trust and IShares Technology 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 Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and IShares Technology.

Diversification Opportunities for First Trust and IShares Technology

0.0

Correlation Coefficient

First Trust  IShares Technology

Pay attention - limited upside

The 3 months correlation between First and IShares is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Technology and iShares Technology ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Technology ETF 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 Technology are associated (or correlated) with IShares Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Technology ETF has no effect on the direction of First Trust i.e., First Trust and IShares Technology go up and down completely randomly.

Pair Corralation between First Trust and IShares Technology

If you would invest  13,984  in First Trust Technology on May 5, 2025 and sell it today you would earn a total of  1,663  from holding First Trust Technology or generate 11.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

First Trust Technology  vs.  iShares Technology ETF

First Trust Technology

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Technology are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating basic indicators, First Trust may actually be approaching a critical reversion point that can send shares even higher in September 2025.

iShares Technology ETF

Risk-Adjusted Performance

Solid

Over the last 90 days iShares Technology ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, IShares Technology is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with First Trust and IShares Technology

The main advantage of trading using opposite First Trust and IShares Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, IShares Technology 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 Technology will offset losses from the drop in IShares Technology's long position.

The idea behind First Trust Technology and iShares Technology ETF pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.