Correlation Between First Trust and Brinsmere
Can any of the company-specific risk be diversified away by investing in both First Trust and Brinsmere 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 Brinsmere into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Exchange Traded and The Brinsmere, you can compare the effects of market volatilities on First Trust and Brinsmere 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 Brinsmere. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Brinsmere.
Diversification Opportunities for First Trust and Brinsmere
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between First and Brinsmere is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Exchange Traded and The Brinsmere in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brinsmere 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 Exchange Traded are associated (or correlated) with Brinsmere. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brinsmere has no effect on the direction of First Trust i.e., First Trust and Brinsmere go up and down completely randomly.
Pair Corralation between First Trust and Brinsmere
Given the investment horizon of 90 days First Trust Exchange Traded is expected to generate 0.87 times more return on investment than Brinsmere. However, First Trust Exchange Traded is 1.15 times less risky than Brinsmere. It trades about 0.16 of its potential returns per unit of risk. The Brinsmere is currently generating about 0.12 per unit of risk. If you would invest 3,566 in First Trust Exchange Traded on September 14, 2024 and sell it today you would earn a total of 453.00 from holding First Trust Exchange Traded or generate 12.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 93.17% |
| Values | Daily Returns |
First Trust Exchange Traded vs. The Brinsmere
Performance |
| Timeline |
| First Trust Exchange |
| Brinsmere |
First Trust and Brinsmere Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Brinsmere
The main advantage of trading using opposite First Trust and Brinsmere positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Brinsmere 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 Brinsmere will offset losses from the drop in Brinsmere's long position.| First Trust vs. First Trust Exchange Traded | First Trust vs. FT Cboe Vest | First Trust vs. FT Cboe Vest | First Trust vs. FT Cboe Vest |
| Brinsmere vs. Freedom Day Dividend | Brinsmere vs. Franklin Templeton ETF | Brinsmere vs. iShares MSCI China | Brinsmere vs. Tidal Trust II |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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