Correlation Between First Trust and TrueShares Structured
Can any of the company-specific risk be diversified away by investing in both First Trust and TrueShares Structured 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 TrueShares Structured into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Cboe and TrueShares Structured Outcome, you can compare the effects of market volatilities on First Trust and TrueShares Structured 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 TrueShares Structured. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and TrueShares Structured.
Diversification Opportunities for First Trust and TrueShares Structured
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between First and TrueShares is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Cboe and TrueShares Structured Outcome in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TrueShares Structured 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 Cboe are associated (or correlated) with TrueShares Structured. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TrueShares Structured has no effect on the direction of First Trust i.e., First Trust and TrueShares Structured go up and down completely randomly.
Pair Corralation between First Trust and TrueShares Structured
Given the investment horizon of 90 days First Trust is expected to generate 1.45 times less return on investment than TrueShares Structured. But when comparing it to its historical volatility, First Trust Cboe is 1.77 times less risky than TrueShares Structured. It trades about 0.44 of its potential returns per unit of risk. TrueShares Structured Outcome is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 3,894 in TrueShares Structured Outcome on September 1, 2024 and sell it today you would earn a total of 177.00 from holding TrueShares Structured Outcome or generate 4.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
First Trust Cboe vs. TrueShares Structured Outcome
Performance |
| Timeline |
| First Trust Cboe |
| TrueShares Structured |
First Trust and TrueShares Structured Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and TrueShares Structured
The main advantage of trading using opposite First Trust and TrueShares Structured positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, TrueShares Structured 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 TrueShares Structured will offset losses from the drop in TrueShares Structured's long position.| First Trust vs. FT Cboe Vest | First Trust vs. First Trust Exchange Traded | First Trust vs. FT Cboe Vest | First Trust vs. FT Cboe Vest |
| TrueShares Structured vs. Innovator ETFs Trust | TrueShares Structured vs. First Trust Cboe | TrueShares Structured vs. Innovator SP 500 | TrueShares Structured vs. Innovator Equity Power |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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