Correlation Between First Trust and Defiance Next
Can any of the company-specific risk be diversified away by investing in both First Trust and Defiance Next 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 Defiance Next 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 Defiance Next Gen, you can compare the effects of market volatilities on First Trust and Defiance Next 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 Defiance Next. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Defiance Next.
Diversification Opportunities for First Trust and Defiance Next
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and Defiance is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding First Trust SkyBridge and Defiance Next Gen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Defiance Next Gen 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 Defiance Next. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Defiance Next Gen has no effect on the direction of First Trust i.e., First Trust and Defiance Next go up and down completely randomly.
Pair Corralation between First Trust and Defiance Next
Given the investment horizon of 90 days First Trust SkyBridge is expected to under-perform the Defiance Next. In addition to that, First Trust is 1.57 times more volatile than Defiance Next Gen. It trades about -0.2 of its total potential returns per unit of risk. Defiance Next Gen is currently generating about -0.03 per unit of volatility. If you would invest 3,205 in Defiance Next Gen on November 27, 2024 and sell it today you would lose (42.00) from holding Defiance Next Gen or give up 1.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust SkyBridge vs. Defiance Next Gen
Performance |
| Timeline |
| First Trust SkyBridge |
| Defiance Next Gen |
First Trust and Defiance Next Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Defiance Next
The main advantage of trading using opposite First Trust and Defiance Next positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Defiance Next 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 Defiance Next will offset losses from the drop in Defiance Next'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 |
| Defiance Next vs. Global X Hydrogen | Defiance Next vs. Fusion Fuel Green | Defiance Next vs. Amplify Lithium Battery | Defiance Next vs. Global X CleanTech |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |