Correlation Between First Trust and Bitwise Funds
Can any of the company-specific risk be diversified away by investing in both First Trust and Bitwise Funds 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 Bitwise Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust NASDAQ and Bitwise Funds Trust, you can compare the effects of market volatilities on First Trust and Bitwise Funds 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 Bitwise Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Bitwise Funds.
Diversification Opportunities for First Trust and Bitwise Funds
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between First and Bitwise is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding First Trust NASDAQ and Bitwise Funds Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bitwise Funds Trust 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 NASDAQ are associated (or correlated) with Bitwise Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bitwise Funds Trust has no effect on the direction of First Trust i.e., First Trust and Bitwise Funds go up and down completely randomly.
Pair Corralation between First Trust and Bitwise Funds
Given the investment horizon of 90 days First Trust is expected to generate 4.5 times less return on investment than Bitwise Funds. But when comparing it to its historical volatility, First Trust NASDAQ is 2.06 times less risky than Bitwise Funds. It trades about 0.14 of its potential returns per unit of risk. Bitwise Funds Trust is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 4,855 in Bitwise Funds Trust on August 26, 2024 and sell it today you would earn a total of 961.00 from holding Bitwise Funds Trust or generate 19.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust NASDAQ vs. Bitwise Funds Trust
Performance |
| Timeline |
| First Trust NASDAQ |
| Bitwise Funds Trust |
First Trust and Bitwise Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Bitwise Funds
The main advantage of trading using opposite First Trust and Bitwise Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Bitwise Funds 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 Bitwise Funds will offset losses from the drop in Bitwise Funds' long position.| First Trust vs. Amplify ETF Trust | First Trust vs. Global X Cybersecurity | First Trust vs. iShares Cybersecurity and | First Trust vs. First Trust Cloud |
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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