Correlation Between First Trust and Quadratic Deflation
Can any of the company-specific risk be diversified away by investing in both First Trust and Quadratic Deflation 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 Quadratic Deflation 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 Quadratic Deflation ETF, you can compare the effects of market volatilities on First Trust and Quadratic Deflation 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 Quadratic Deflation. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Quadratic Deflation.
Diversification Opportunities for First Trust and Quadratic Deflation
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between First and Quadratic is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding First Trust SkyBridge and Quadratic Deflation ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quadratic Deflation ETF 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 Quadratic Deflation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quadratic Deflation ETF has no effect on the direction of First Trust i.e., First Trust and Quadratic Deflation go up and down completely randomly.
Pair Corralation between First Trust and Quadratic Deflation
Given the investment horizon of 90 days First Trust SkyBridge is expected to generate 5.95 times more return on investment than Quadratic Deflation. However, First Trust is 5.95 times more volatile than Quadratic Deflation ETF. It trades about 0.11 of its potential returns per unit of risk. Quadratic Deflation ETF is currently generating about -0.01 per unit of risk. If you would invest 1,240 in First Trust SkyBridge on August 29, 2024 and sell it today you would earn a total of 817.00 from holding First Trust SkyBridge or generate 65.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust SkyBridge vs. Quadratic Deflation ETF
Performance |
| Timeline |
| First Trust SkyBridge |
| Quadratic Deflation ETF |
First Trust and Quadratic Deflation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Quadratic Deflation
The main advantage of trading using opposite First Trust and Quadratic Deflation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Quadratic Deflation 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 Quadratic Deflation will offset losses from the drop in Quadratic Deflation'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 |
| Quadratic Deflation vs. SPDR Barclays Short | Quadratic Deflation vs. SPDR Portfolio Intermediate | Quadratic Deflation vs. SPDR Barclays Long | Quadratic Deflation vs. SPDR Barclays Intermediate |
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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