Correlation Between First Trust and Tradr 2X
Can any of the company-specific risk be diversified away by investing in both First Trust and Tradr 2X 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 Tradr 2X 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 Tradr 2X Long, you can compare the effects of market volatilities on First Trust and Tradr 2X 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 Tradr 2X. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Tradr 2X.
Diversification Opportunities for First Trust and Tradr 2X
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Tradr is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Exchange Traded and Tradr 2X Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tradr 2X Long 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 Tradr 2X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tradr 2X Long has no effect on the direction of First Trust i.e., First Trust and Tradr 2X go up and down completely randomly.
Pair Corralation between First Trust and Tradr 2X
Given the investment horizon of 90 days First Trust is expected to generate 3.25 times less return on investment than Tradr 2X. But when comparing it to its historical volatility, First Trust Exchange Traded is 10.89 times less risky than Tradr 2X. It trades about 0.25 of its potential returns per unit of risk. Tradr 2X Long is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,658 in Tradr 2X Long on August 26, 2024 and sell it today you would earn a total of 86.00 from holding Tradr 2X Long or generate 3.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Exchange Traded vs. Tradr 2X Long
Performance |
| Timeline |
| First Trust Exchange |
| Tradr 2X Long |
First Trust and Tradr 2X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Tradr 2X
The main advantage of trading using opposite First Trust and Tradr 2X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Tradr 2X 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 Tradr 2X will offset losses from the drop in Tradr 2X'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 |
| Tradr 2X vs. FT Vest Equity | Tradr 2X vs. Northern Lights | Tradr 2X vs. Dimensional International High | Tradr 2X 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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