Correlation Between First Trust and Touchstone ETF
Can any of the company-specific risk be diversified away by investing in both First Trust and Touchstone ETF 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 Touchstone ETF 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 Touchstone ETF Trust, you can compare the effects of market volatilities on First Trust and Touchstone ETF 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 Touchstone ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Touchstone ETF.
Diversification Opportunities for First Trust and Touchstone ETF
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between First and Touchstone is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Exchange Traded and Touchstone ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone ETF Trust 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 Touchstone ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone ETF Trust has no effect on the direction of First Trust i.e., First Trust and Touchstone ETF go up and down completely randomly.
Pair Corralation between First Trust and Touchstone ETF
Given the investment horizon of 90 days First Trust is expected to generate 2.59 times less return on investment than Touchstone ETF. But when comparing it to its historical volatility, First Trust Exchange Traded is 3.8 times less risky than Touchstone ETF. It trades about 0.46 of its potential returns per unit of risk. Touchstone ETF Trust is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 3,567 in Touchstone ETF Trust on September 1, 2024 and sell it today you would earn a total of 168.00 from holding Touchstone ETF Trust or generate 4.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
First Trust Exchange Traded vs. Touchstone ETF Trust
Performance |
| Timeline |
| First Trust Exchange |
| Touchstone ETF Trust |
First Trust and Touchstone ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Touchstone ETF
The main advantage of trading using opposite First Trust and Touchstone ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Touchstone ETF 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 Touchstone ETF will offset losses from the drop in Touchstone ETF's long position.| First Trust vs. First Trust Exchange Traded | First Trust vs. First Trust Exchange Traded | First Trust vs. FT Cboe Vest | First Trust vs. FT Cboe Vest |
| Touchstone ETF vs. Vanguard Total Stock | Touchstone ETF vs. SPDR SP 500 | Touchstone ETF vs. iShares Core SP | Touchstone ETF vs. Vanguard Dividend Appreciation |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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