Correlation Between First Trust and AXS 125X
Can any of the company-specific risk be diversified away by investing in both First Trust and AXS 125X 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 AXS 125X 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 AXS 125X NVDA, you can compare the effects of market volatilities on First Trust and AXS 125X 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 AXS 125X. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and AXS 125X.
Diversification Opportunities for First Trust and AXS 125X
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between First and AXS is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding First Trust SkyBridge and AXS 125X NVDA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXS 125X NVDA 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 AXS 125X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXS 125X NVDA has no effect on the direction of First Trust i.e., First Trust and AXS 125X go up and down completely randomly.
Pair Corralation between First Trust and AXS 125X
Given the investment horizon of 90 days First Trust SkyBridge is expected to generate 1.93 times more return on investment than AXS 125X. However, First Trust is 1.93 times more volatile than AXS 125X NVDA. It trades about 0.31 of its potential returns per unit of risk. AXS 125X NVDA is currently generating about -0.08 per unit of risk. If you would invest 1,400 in First Trust SkyBridge on September 1, 2024 and sell it today you would earn a total of 670.00 from holding First Trust SkyBridge or generate 47.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
First Trust SkyBridge vs. AXS 125X NVDA
Performance |
| Timeline |
| First Trust SkyBridge |
| AXS 125X NVDA |
First Trust and AXS 125X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and AXS 125X
The main advantage of trading using opposite First Trust and AXS 125X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, AXS 125X 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 AXS 125X will offset losses from the drop in AXS 125X'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 |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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