Correlation Between 3EDGE Dynamic and First Trust
Can any of the company-specific risk be diversified away by investing in both 3EDGE Dynamic and First Trust 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 3EDGE Dynamic and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 3EDGE Dynamic Fixed and First Trust TCW, you can compare the effects of market volatilities on 3EDGE Dynamic and First Trust 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 3EDGE Dynamic with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3EDGE Dynamic and First Trust.
Diversification Opportunities for 3EDGE Dynamic and First Trust
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 3EDGE and First is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding 3EDGE Dynamic Fixed and First Trust TCW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust TCW and 3EDGE Dynamic 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 3EDGE Dynamic Fixed are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust TCW has no effect on the direction of 3EDGE Dynamic i.e., 3EDGE Dynamic and First Trust go up and down completely randomly.
Pair Corralation between 3EDGE Dynamic and First Trust
Given the investment horizon of 90 days 3EDGE Dynamic is expected to generate 13.67 times less return on investment than First Trust. But when comparing it to its historical volatility, 3EDGE Dynamic Fixed is 10.79 times less risky than First Trust. It trades about 0.16 of its potential returns per unit of risk. First Trust TCW is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,598 in First Trust TCW on October 26, 2024 and sell it today you would earn a total of 62.00 from holding First Trust TCW or generate 3.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
3EDGE Dynamic Fixed vs. First Trust TCW
Performance |
| Timeline |
| 3EDGE Dynamic Fixed |
| First Trust TCW |
3EDGE Dynamic and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 3EDGE Dynamic and First Trust
The main advantage of trading using opposite 3EDGE Dynamic and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3EDGE Dynamic position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| 3EDGE Dynamic vs. MFS Active Exchange | 3EDGE Dynamic vs. First Trust Exchange Traded | 3EDGE Dynamic vs. Vanguard Intermediate Term Treasury | 3EDGE Dynamic vs. Vanguard Long Term Treasury |
| First Trust vs. First Trust TCW | First Trust vs. SPDR Bloomberg Barclays | First Trust vs. First Trust Short | First Trust vs. First Trust Emerging |
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.
Other Complementary Tools
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |