Correlation Between First Trust and SPDR Barclays
Can any of the company-specific risk be diversified away by investing in both First Trust and SPDR Barclays 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 SPDR Barclays 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 SPDR Barclays Long, you can compare the effects of market volatilities on First Trust and SPDR Barclays 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 SPDR Barclays. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and SPDR Barclays.
Diversification Opportunities for First Trust and SPDR Barclays
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between First and SPDR is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding First Trust SkyBridge and SPDR Barclays Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Barclays Long 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 SPDR Barclays. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Barclays Long has no effect on the direction of First Trust i.e., First Trust and SPDR Barclays go up and down completely randomly.
Pair Corralation between First Trust and SPDR Barclays
Given the investment horizon of 90 days First Trust SkyBridge is expected to generate 7.68 times more return on investment than SPDR Barclays. However, First Trust is 7.68 times more volatile than SPDR Barclays Long. It trades about 0.2 of its potential returns per unit of risk. SPDR Barclays Long is currently generating about 0.09 per unit of risk. If you would invest 1,590 in First Trust SkyBridge on August 28, 2024 and sell it today you would earn a total of 426.00 from holding First Trust SkyBridge or generate 26.79% 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. SPDR Barclays Long
Performance |
| Timeline |
| First Trust SkyBridge |
| SPDR Barclays Long |
First Trust and SPDR Barclays Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and SPDR Barclays
The main advantage of trading using opposite First Trust and SPDR Barclays positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, SPDR Barclays 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 SPDR Barclays will offset losses from the drop in SPDR Barclays' 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 |
| SPDR Barclays vs. iShares 10 Year | SPDR Barclays vs. SPDR Barclays Intermediate | SPDR Barclays vs. SPDR Barclays Short | SPDR Barclays vs. FlexShares Credit Scored Long |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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