Correlation Between First Trust and TappAlpha SPY
Can any of the company-specific risk be diversified away by investing in both First Trust and TappAlpha SPY 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 TappAlpha SPY 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 TappAlpha SPY Growth, you can compare the effects of market volatilities on First Trust and TappAlpha SPY 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 TappAlpha SPY. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and TappAlpha SPY.
Diversification Opportunities for First Trust and TappAlpha SPY
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between First and TappAlpha is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding First Trust SkyBridge and TappAlpha SPY Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TappAlpha SPY Growth 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 TappAlpha SPY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TappAlpha SPY Growth has no effect on the direction of First Trust i.e., First Trust and TappAlpha SPY go up and down completely randomly.
Pair Corralation between First Trust and TappAlpha SPY
Given the investment horizon of 90 days First Trust SkyBridge is expected to generate 5.85 times more return on investment than TappAlpha SPY. However, First Trust is 5.85 times more volatile than TappAlpha SPY Growth. It trades about 0.04 of its potential returns per unit of risk. TappAlpha SPY Growth is currently generating about 0.08 per unit of risk. If you would invest 1,243 in First Trust SkyBridge on November 28, 2024 and sell it today you would earn a total of 177.00 from holding First Trust SkyBridge or generate 14.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 72.68% |
| Values | Daily Returns |
First Trust SkyBridge vs. TappAlpha SPY Growth
Performance |
| Timeline |
| First Trust SkyBridge |
| TappAlpha SPY Growth |
First Trust and TappAlpha SPY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and TappAlpha SPY
The main advantage of trading using opposite First Trust and TappAlpha SPY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, TappAlpha SPY 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 TappAlpha SPY will offset losses from the drop in TappAlpha SPY'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 |
| TappAlpha SPY vs. Strategy Shares | TappAlpha SPY vs. Freedom Day Dividend | TappAlpha SPY vs. Franklin Templeton ETF | TappAlpha SPY vs. iShares MSCI China |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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