Correlation Between First Trust and X Square
Can any of the company-specific risk be diversified away by investing in both First Trust and X Square 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 X Square into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Lunt and X Square Balanced, you can compare the effects of market volatilities on First Trust and X Square 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 X Square. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and X Square.
Diversification Opportunities for First Trust and X Square
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and SQBFX is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Lunt and X Square Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X Square Balanced 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 Lunt are associated (or correlated) with X Square. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X Square Balanced has no effect on the direction of First Trust i.e., First Trust and X Square go up and down completely randomly.
Pair Corralation between First Trust and X Square
Given the investment horizon of 90 days First Trust is expected to generate 1.58 times less return on investment than X Square. In addition to that, First Trust is 1.46 times more volatile than X Square Balanced. It trades about 0.05 of its total potential returns per unit of risk. X Square Balanced is currently generating about 0.1 per unit of volatility. If you would invest 1,413 in X Square Balanced on September 12, 2024 and sell it today you would earn a total of 16.00 from holding X Square Balanced or generate 1.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Lunt vs. X Square Balanced
Performance |
| Timeline |
| First Trust Lunt |
| X Square Balanced |
First Trust and X Square Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and X Square
The main advantage of trading using opposite First Trust and X Square positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, X Square 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 X Square will offset losses from the drop in X Square's long position.| First Trust vs. FT Vest Equity | First Trust vs. Northern Lights | First Trust vs. Dimensional International High | First Trust vs. JPMorgan Fundamental Data |
| X Square vs. ALPSSmith Balanced Opportunity | X Square vs. ALPSSmith Balanced Opportunity | X Square vs. ALPSSmith Balanced Opportunity | X Square vs. Aquagold International |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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