Correlation Between First Trust and ProShares Trust
Can any of the company-specific risk be diversified away by investing in both First Trust and ProShares Trust 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 ProShares Trust 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 ProShares Trust, you can compare the effects of market volatilities on First Trust and ProShares Trust 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 ProShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and ProShares Trust.
Diversification Opportunities for First Trust and ProShares Trust
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and ProShares is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding First Trust SkyBridge and ProShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares 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 SkyBridge are associated (or correlated) with ProShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Trust has no effect on the direction of First Trust i.e., First Trust and ProShares Trust go up and down completely randomly.
Pair Corralation between First Trust and ProShares Trust
Given the investment horizon of 90 days First Trust SkyBridge is expected to generate 1.38 times more return on investment than ProShares Trust. However, First Trust is 1.38 times more volatile than ProShares Trust. It trades about 0.1 of its potential returns per unit of risk. ProShares Trust is currently generating about 0.12 per unit of risk. If you would invest 374.00 in First Trust SkyBridge on August 30, 2024 and sell it today you would earn a total of 1,683 from holding First Trust SkyBridge or generate 450.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 59.19% |
| Values | Daily Returns |
First Trust SkyBridge vs. ProShares Trust
Performance |
| Timeline |
| First Trust SkyBridge |
| ProShares Trust |
First Trust and ProShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and ProShares Trust
The main advantage of trading using opposite First Trust and ProShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, ProShares Trust 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 ProShares Trust will offset losses from the drop in ProShares Trust'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 |
| ProShares Trust vs. ProShares Trust | ProShares Trust vs. iShares Ethereum Trust | ProShares Trust vs. ProShares Trust | ProShares Trust vs. Grayscale Ethereum Trust |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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