Correlation Between First Trust and BZDYF
Can any of the company-specific risk be diversified away by investing in both First Trust and BZDYF 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 BZDYF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust S Network and BZDYF, you can compare the effects of market volatilities on First Trust and BZDYF 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 BZDYF. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and BZDYF.
Diversification Opportunities for First Trust and BZDYF
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and BZDYF is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding First Trust S Network and BZDYF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BZDYF 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 S Network are associated (or correlated) with BZDYF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BZDYF has no effect on the direction of First Trust i.e., First Trust and BZDYF go up and down completely randomly.
Pair Corralation between First Trust and BZDYF
Given the investment horizon of 90 days First Trust S Network is expected to generate 2.44 times more return on investment than BZDYF. However, First Trust is 2.44 times more volatile than BZDYF. It trades about 0.05 of its potential returns per unit of risk. BZDYF is currently generating about 0.08 per unit of risk. If you would invest 4,293 in First Trust S Network on August 27, 2024 and sell it today you would earn a total of 1,502 from holding First Trust S Network or generate 34.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 81.05% |
| Values | Daily Returns |
First Trust S Network vs. BZDYF
Performance |
| Timeline |
| First Trust S |
| BZDYF |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
First Trust and BZDYF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and BZDYF
The main advantage of trading using opposite First Trust and BZDYF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, BZDYF 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 BZDYF will offset losses from the drop in BZDYF's long position.| First Trust vs. KraneShares Electric Vehicles | First Trust vs. First Trust Nasdaq | First Trust vs. VanEck Gaming ETF | First Trust vs. First Trust NASDAQ |
| BZDYF vs. FT Vest Equity | BZDYF vs. Zillow Group Class | BZDYF vs. Northern Lights | BZDYF vs. VanEck Vectors Moodys |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |