Correlation Between First Trust and SPDR Kensho
Can any of the company-specific risk be diversified away by investing in both First Trust and SPDR Kensho 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 SPDR Kensho into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Natural and SPDR Kensho Clean, you can compare the effects of market volatilities on First Trust and SPDR Kensho 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 SPDR Kensho. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and SPDR Kensho.
Diversification Opportunities for First Trust and SPDR Kensho
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between First and SPDR is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Natural and SPDR Kensho Clean in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Kensho Clean 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 Natural are associated (or correlated) with SPDR Kensho. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Kensho Clean has no effect on the direction of First Trust i.e., First Trust and SPDR Kensho go up and down completely randomly.
Pair Corralation between First Trust and SPDR Kensho
Considering the 90-day investment horizon First Trust Natural is expected to generate 0.92 times more return on investment than SPDR Kensho. However, First Trust Natural is 1.08 times less risky than SPDR Kensho. It trades about -0.11 of its potential returns per unit of risk. SPDR Kensho Clean is currently generating about -0.11 per unit of risk. If you would invest 2,545 in First Trust Natural on November 28, 2024 and sell it today you would lose (109.00) from holding First Trust Natural or give up 4.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Natural vs. SPDR Kensho Clean
Performance |
| Timeline |
| First Trust Natural |
| SPDR Kensho Clean |
First Trust and SPDR Kensho Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and SPDR Kensho
The main advantage of trading using opposite First Trust and SPDR Kensho positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, SPDR Kensho 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 SPDR Kensho will offset losses from the drop in SPDR Kensho's long position.| First Trust vs. iShares Oil Gas | First Trust vs. Invesco Dynamic Energy | First Trust vs. SPDR SP Oil | First Trust vs. United States Natural |
| SPDR Kensho vs. ALPS Clean Energy | SPDR Kensho vs. VanEck Low Carbon | SPDR Kensho vs. Invesco Global Clean | SPDR Kensho vs. SPDR Kensho New |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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