Correlation Between First Trust and Simplify Exchange
Can any of the company-specific risk be diversified away by investing in both First Trust and Simplify Exchange 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 Simplify Exchange into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Alternative and Simplify Exchange Traded, you can compare the effects of market volatilities on First Trust and Simplify Exchange 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 Simplify Exchange. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Simplify Exchange.
Diversification Opportunities for First Trust and Simplify Exchange
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between First and Simplify is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Alternative and Simplify Exchange Traded in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simplify Exchange Traded 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 Alternative are associated (or correlated) with Simplify Exchange. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simplify Exchange Traded has no effect on the direction of First Trust i.e., First Trust and Simplify Exchange go up and down completely randomly.
Pair Corralation between First Trust and Simplify Exchange
Given the investment horizon of 90 days First Trust Alternative is expected to generate 0.99 times more return on investment than Simplify Exchange. However, First Trust Alternative is 1.01 times less risky than Simplify Exchange. It trades about 0.04 of its potential returns per unit of risk. Simplify Exchange Traded is currently generating about -0.18 per unit of risk. If you would invest 2,787 in First Trust Alternative on August 31, 2024 and sell it today you would earn a total of 16.00 from holding First Trust Alternative or generate 0.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Alternative vs. Simplify Exchange Traded
Performance |
| Timeline |
| First Trust Alternative |
| Simplify Exchange Traded |
First Trust and Simplify Exchange Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Simplify Exchange
The main advantage of trading using opposite First Trust and Simplify Exchange positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Simplify Exchange 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 Simplify Exchange will offset losses from the drop in Simplify Exchange's long position.| First Trust vs. First Trust Emerging | First Trust vs. First Trust Income | First Trust vs. First Trust SSI | First Trust vs. First Trust Indxx |
| Simplify Exchange vs. Cambria Tail Risk | Simplify Exchange vs. IQ Merger Arbitrage | Simplify Exchange vs. Amplify BlackSwan Growth | Simplify Exchange vs. AdvisorShares Dorsey Wright |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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