Correlation Between First Trust and Roundhill Video
Can any of the company-specific risk be diversified away by investing in both First Trust and Roundhill Video 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 Roundhill Video 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 Roundhill Video Games, you can compare the effects of market volatilities on First Trust and Roundhill Video 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 Roundhill Video. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Roundhill Video.
Diversification Opportunities for First Trust and Roundhill Video
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Roundhill is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding First Trust S Network and Roundhill Video Games in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roundhill Video Games 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 Roundhill Video. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roundhill Video Games has no effect on the direction of First Trust i.e., First Trust and Roundhill Video go up and down completely randomly.
Pair Corralation between First Trust and Roundhill Video
Given the investment horizon of 90 days First Trust S Network is expected to under-perform the Roundhill Video. But the etf apears to be less risky and, when comparing its historical volatility, First Trust S Network is 1.36 times less risky than Roundhill Video. The etf trades about -0.03 of its potential returns per unit of risk. The Roundhill Video Games is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 1,755 in Roundhill Video Games on August 26, 2024 and sell it today you would earn a total of 234.00 from holding Roundhill Video Games or generate 13.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust S Network vs. Roundhill Video Games
Performance |
| Timeline |
| First Trust S |
| Roundhill Video Games |
First Trust and Roundhill Video Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Roundhill Video
The main advantage of trading using opposite First Trust and Roundhill Video positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Roundhill Video 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 Roundhill Video will offset losses from the drop in Roundhill Video'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 |
| Roundhill Video vs. Vanguard Industrials Index | Roundhill Video vs. Vanguard Materials Index | Roundhill Video vs. Vanguard Consumer Discretionary | Roundhill Video vs. Vanguard Consumer Staples |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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