Correlation Between First Trust and Pacer Lunt
Can any of the company-specific risk be diversified away by investing in both First Trust and Pacer Lunt 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 Pacer Lunt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust SkyBridge and Pacer Lunt Large, you can compare the effects of market volatilities on First Trust and Pacer Lunt 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 Pacer Lunt. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Pacer Lunt.
Diversification Opportunities for First Trust and Pacer Lunt
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between First and Pacer is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding First Trust SkyBridge and Pacer Lunt Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Lunt Large 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 SkyBridge are associated (or correlated) with Pacer Lunt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Lunt Large has no effect on the direction of First Trust i.e., First Trust and Pacer Lunt go up and down completely randomly.
Pair Corralation between First Trust and Pacer Lunt
Given the investment horizon of 90 days First Trust SkyBridge is expected to generate 12.09 times more return on investment than Pacer Lunt. However, First Trust is 12.09 times more volatile than Pacer Lunt Large. It trades about 0.36 of its potential returns per unit of risk. Pacer Lunt Large is currently generating about 0.51 per unit of risk. If you would invest 1,331 in First Trust SkyBridge on September 3, 2024 and sell it today you would earn a total of 739.00 from holding First Trust SkyBridge or generate 55.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust SkyBridge vs. Pacer Lunt Large
Performance |
| Timeline |
| First Trust SkyBridge |
| Pacer Lunt Large |
First Trust and Pacer Lunt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Pacer Lunt
The main advantage of trading using opposite First Trust and Pacer Lunt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Pacer Lunt 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 Pacer Lunt will offset losses from the drop in Pacer Lunt's long position.| First Trust vs. VanEck Digital Transformation | First Trust vs. Bitwise Crypto Industry | First Trust vs. Global X Blockchain | First Trust vs. First Trust Indxx |
| Pacer Lunt vs. Pacer Lunt Large | Pacer Lunt vs. Pacer Small Cap | Pacer Lunt vs. Pacer Lunt MidCap | Pacer Lunt vs. Pacer Cash Cows |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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