Correlation Between FlexShares Real and First Trust

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both FlexShares Real 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 FlexShares Real and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FlexShares Real Assets and First Trust Multi, you can compare the effects of market volatilities on FlexShares Real 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 FlexShares Real with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of FlexShares Real and First Trust.

Diversification Opportunities for FlexShares Real and First Trust

0.04
  Correlation Coefficient

Significant diversification

The 3 months correlation between FlexShares and First is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding FlexShares Real Assets and First Trust Multi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Multi and FlexShares Real 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 FlexShares Real Assets 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 Multi has no effect on the direction of FlexShares Real i.e., FlexShares Real and First Trust go up and down completely randomly.

Pair Corralation between FlexShares Real and First Trust

Given the investment horizon of 90 days FlexShares Real is expected to generate 4.77 times less return on investment than First Trust. But when comparing it to its historical volatility, FlexShares Real Assets is 1.89 times less risky than First Trust. It trades about 0.19 of its potential returns per unit of risk. First Trust Multi is currently generating about 0.48 of returns per unit of risk over similar time horizon. If you would invest  13,412  in First Trust Multi on September 1, 2024 and sell it today you would earn a total of  1,566  from holding First Trust Multi or generate 11.68% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

FlexShares Real Assets  vs.  First Trust Multi

 Performance 
       Timeline  
FlexShares Real Assets 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in FlexShares Real Assets are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, FlexShares Real is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.
First Trust Multi 

Risk-Adjusted Performance

24 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Multi are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting basic indicators, First Trust exhibited solid returns over the last few months and may actually be approaching a breakup point.

FlexShares Real and First Trust Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with FlexShares Real and First Trust

The main advantage of trading using opposite FlexShares Real and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FlexShares Real 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.
The idea behind FlexShares Real Assets and First Trust Multi 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

Other Complementary Tools

Analyst Advice
Analyst recommendations and target price estimates broken down by several categories
Share Portfolio
Track or share privately all of your investments from the convenience of any device
Sectors
List of equity sectors categorizing publicly traded companies based on their primary business activities
Technical Analysis
Check basic technical indicators and analysis based on most latest market data
Portfolio File Import
Quickly import all of your third-party portfolios from your local drive in csv format