Correlation Between Burney Factor and First Trust
Can any of the company-specific risk be diversified away by investing in both Burney Factor 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 Burney Factor and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Burney Factor Rotation and First Trust Growth, you can compare the effects of market volatilities on Burney Factor 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 Burney Factor with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Burney Factor and First Trust.
Diversification Opportunities for Burney Factor and First Trust
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Burney and First is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Burney Factor Rotation and First Trust Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Growth and Burney Factor 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 Burney Factor Rotation 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 Growth has no effect on the direction of Burney Factor i.e., Burney Factor and First Trust go up and down completely randomly.
Pair Corralation between Burney Factor and First Trust
Given the investment horizon of 90 days Burney Factor Rotation is expected to generate 0.98 times more return on investment than First Trust. However, Burney Factor Rotation is 1.02 times less risky than First Trust. It trades about 0.11 of its potential returns per unit of risk. First Trust Growth is currently generating about 0.1 per unit of risk. If you would invest 2,681 in Burney Factor Rotation on August 27, 2024 and sell it today you would earn a total of 1,615 from holding Burney Factor Rotation or generate 60.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Burney Factor Rotation vs. First Trust Growth
Performance |
| Timeline |
| Burney Factor Rotation |
| First Trust Growth |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Burney Factor and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Burney Factor and First Trust
The main advantage of trading using opposite Burney Factor and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Burney Factor 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.| Burney Factor vs. Invesco BulletShares 2030 | Burney Factor vs. Invesco BulletShares 2025 | Burney Factor vs. Invesco BulletShares 2024 |
| First Trust vs. FT Vest Equity | First Trust vs. Northern Lights | First Trust vs. Dimensional International High | First Trust vs. First Trust Exchange Traded |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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