Correlation Between Invesco BulletShares and First Trust
Can any of the company-specific risk be diversified away by investing in both Invesco BulletShares 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 Invesco BulletShares and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco BulletShares 2027 and First Trust TCW, you can compare the effects of market volatilities on Invesco BulletShares 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 Invesco BulletShares with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco BulletShares and First Trust.
Diversification Opportunities for Invesco BulletShares and First Trust
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Invesco and First is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Invesco BulletShares 2027 and First Trust TCW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust TCW and Invesco BulletShares 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 Invesco BulletShares 2027 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 TCW has no effect on the direction of Invesco BulletShares i.e., Invesco BulletShares and First Trust go up and down completely randomly.
Pair Corralation between Invesco BulletShares and First Trust
Given the investment horizon of 90 days Invesco BulletShares 2027 is expected to generate 0.8 times more return on investment than First Trust. However, Invesco BulletShares 2027 is 1.25 times less risky than First Trust. It trades about 0.1 of its potential returns per unit of risk. First Trust TCW is currently generating about 0.03 per unit of risk. If you would invest 1,896 in Invesco BulletShares 2027 on August 30, 2024 and sell it today you would earn a total of 362.00 from holding Invesco BulletShares 2027 or generate 19.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco BulletShares 2027 vs. First Trust TCW
Performance |
| Timeline |
| Invesco BulletShares 2027 |
| First Trust TCW |
Invesco BulletShares and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco BulletShares and First Trust
The main advantage of trading using opposite Invesco BulletShares and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco BulletShares 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.| Invesco BulletShares vs. iShares Edge Investment | Invesco BulletShares vs. iShares Intl High | Invesco BulletShares vs. iShares JP Morgan |
| First Trust vs. First Trust Low | First Trust vs. First Trust Enhanced | First Trust vs. First Trust Tactical | 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |