Correlation Between First Trust and IQ Large
Can any of the company-specific risk be diversified away by investing in both First Trust and IQ Large 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 IQ Large 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 IQ Large Cap, you can compare the effects of market volatilities on First Trust and IQ Large 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 IQ Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and IQ Large.
Diversification Opportunities for First Trust and IQ Large
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and LRND is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Exchange Traded and IQ Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQ Large Cap 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 IQ Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IQ Large Cap has no effect on the direction of First Trust i.e., First Trust and IQ Large go up and down completely randomly.
Pair Corralation between First Trust and IQ Large
Given the investment horizon of 90 days First Trust is expected to generate 2.22 times less return on investment than IQ Large. But when comparing it to its historical volatility, First Trust Exchange Traded is 2.7 times less risky than IQ Large. It trades about 0.14 of its potential returns per unit of risk. IQ Large Cap is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,023 in IQ Large Cap on August 30, 2024 and sell it today you would earn a total of 1,385 from holding IQ Large Cap or generate 68.46% 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. IQ Large Cap
Performance |
| Timeline |
| First Trust Exchange |
| IQ Large Cap |
First Trust and IQ Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and IQ Large
The main advantage of trading using opposite First Trust and IQ Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, IQ Large 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 IQ Large will offset losses from the drop in IQ Large's long position.| First Trust vs. ABIVAX Socit Anonyme | First Trust vs. Pinnacle Sherman Multi Strategy | First Trust vs. Morningstar Unconstrained Allocation | First Trust vs. SPACE |
| IQ Large vs. FT Vest Equity | IQ Large vs. Northern Lights | IQ Large vs. Dimensional International High | IQ Large 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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