Correlation Between First Trust and USCF Midstream
Can any of the company-specific risk be diversified away by investing in both First Trust and USCF Midstream 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 USCF Midstream into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust North and USCF Midstream Energy, you can compare the effects of market volatilities on First Trust and USCF Midstream 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 USCF Midstream. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and USCF Midstream.
Diversification Opportunities for First Trust and USCF Midstream
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between First and USCF is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding First Trust North and USCF Midstream Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USCF Midstream Energy 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 North are associated (or correlated) with USCF Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USCF Midstream Energy has no effect on the direction of First Trust i.e., First Trust and USCF Midstream go up and down completely randomly.
Pair Corralation between First Trust and USCF Midstream
Given the investment horizon of 90 days First Trust North is expected to generate 0.73 times more return on investment than USCF Midstream. However, First Trust North is 1.36 times less risky than USCF Midstream. It trades about -0.01 of its potential returns per unit of risk. USCF Midstream Energy is currently generating about -0.01 per unit of risk. If you would invest 3,756 in First Trust North on November 27, 2024 and sell it today you would lose (24.00) from holding First Trust North or give up 0.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust North vs. USCF Midstream Energy
Performance |
| Timeline |
| First Trust North |
| USCF Midstream Energy |
First Trust and USCF Midstream Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and USCF Midstream
The main advantage of trading using opposite First Trust and USCF Midstream positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, USCF Midstream 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 USCF Midstream will offset losses from the drop in USCF Midstream's long position.| First Trust vs. Global X MLP | First Trust vs. Global X MLP | First Trust vs. First Trust Energy | First Trust vs. First Trust Preferred |
| USCF Midstream vs. EA Series Trust | USCF Midstream vs. ETF Opportunities Trust | USCF Midstream vs. Global X MLP | USCF Midstream vs. indie Semiconductor |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |