Correlation Between First Trust and AB Active
Can any of the company-specific risk be diversified away by investing in both First Trust and AB Active 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 AB Active 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 AB Active ETFs,, you can compare the effects of market volatilities on First Trust and AB Active 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 AB Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and AB Active.
Diversification Opportunities for First Trust and AB Active
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and LRGC is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Exchange Traded and AB Active ETFs, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB Active ETFs, 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 AB Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB Active ETFs, has no effect on the direction of First Trust i.e., First Trust and AB Active go up and down completely randomly.
Pair Corralation between First Trust and AB Active
Given the investment horizon of 90 days First Trust is expected to generate 2.97 times less return on investment than AB Active. But when comparing it to its historical volatility, First Trust Exchange Traded is 4.2 times less risky than AB Active. It trades about 0.26 of its potential returns per unit of risk. AB Active ETFs, is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 6,720 in AB Active ETFs, on August 28, 2024 and sell it today you would earn a total of 232.00 from holding AB Active ETFs, or generate 3.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Exchange Traded vs. AB Active ETFs,
Performance |
| Timeline |
| First Trust Exchange |
| AB Active ETFs, |
First Trust and AB Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and AB Active
The main advantage of trading using opposite First Trust and AB Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, AB Active 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 AB Active will offset losses from the drop in AB Active'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 |
| AB Active vs. FT Vest Equity | AB Active vs. Northern Lights | AB Active vs. Dimensional International High | AB Active vs. First Trust Exchange Traded |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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