Correlation Between SHP ETF and First Trust
Can any of the company-specific risk be diversified away by investing in both SHP ETF and First Trust 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 SHP ETF and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SHP ETF Trust and First Trust Low, you can compare the effects of market volatilities on SHP ETF and First Trust 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 SHP ETF with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of SHP ETF and First Trust.
Diversification Opportunities for SHP ETF and First Trust
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SHP and First is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding SHP ETF Trust and First Trust Low in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Low and SHP ETF 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 SHP ETF Trust are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Low has no effect on the direction of SHP ETF i.e., SHP ETF and First Trust go up and down completely randomly.
Pair Corralation between SHP ETF and First Trust
Given the investment horizon of 90 days SHP ETF Trust is expected to generate 0.35 times more return on investment than First Trust. However, SHP ETF Trust is 2.89 times less risky than First Trust. It trades about 0.36 of its potential returns per unit of risk. First Trust Low is currently generating about 0.11 per unit of risk. If you would invest 4,446 in SHP ETF Trust on August 29, 2024 and sell it today you would earn a total of 539.00 from holding SHP ETF Trust or generate 12.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SHP ETF Trust vs. First Trust Low
Performance |
| Timeline |
| SHP ETF Trust |
| First Trust Low |
SHP ETF and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SHP ETF and First Trust
The main advantage of trading using opposite SHP ETF and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SHP ETF position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| SHP ETF vs. SHP ETF Trust | SHP ETF vs. SHP ETF Trust | SHP ETF vs. iShares Trust | SHP ETF vs. VanEck ETF Trust |
| First Trust vs. FlexShares Disciplined Duration | First Trust vs. Vanguard Mortgage Backed Securities | First Trust vs. Simplify Exchange Traded | First Trust vs. WisdomTree Mortgage Plus |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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