Correlation Between First Trust and Pacer Cash
Can any of the company-specific risk be diversified away by investing in both First Trust and Pacer Cash 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 Pacer Cash into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust SSI and Pacer Cash Cows, you can compare the effects of market volatilities on First Trust and Pacer Cash 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 Pacer Cash. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Pacer Cash.
Diversification Opportunities for First Trust and Pacer Cash
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between First and Pacer is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding First Trust SSI and Pacer Cash Cows in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Cash Cows 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 SSI are associated (or correlated) with Pacer Cash. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Cash Cows has no effect on the direction of First Trust i.e., First Trust and Pacer Cash go up and down completely randomly.
Pair Corralation between First Trust and Pacer Cash
Given the investment horizon of 90 days First Trust SSI is expected to generate 1.7 times more return on investment than Pacer Cash. However, First Trust is 1.7 times more volatile than Pacer Cash Cows. It trades about 0.14 of its potential returns per unit of risk. Pacer Cash Cows is currently generating about 0.06 per unit of risk. If you would invest 3,685 in First Trust SSI on October 22, 2024 and sell it today you would earn a total of 65.00 from holding First Trust SSI or generate 1.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
First Trust SSI vs. Pacer Cash Cows
Performance |
| Timeline |
| First Trust SSI |
| Pacer Cash Cows |
First Trust and Pacer Cash Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Pacer Cash
The main advantage of trading using opposite First Trust and Pacer Cash positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Pacer Cash 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 Pacer Cash will offset losses from the drop in Pacer Cash's long position.| First Trust vs. First Trust Emerging | First Trust vs. First Trust Managed | First Trust vs. First Trust TCW | First Trust vs. First Trust Senior |
| Pacer Cash vs. First Trust SSI | Pacer Cash vs. Franklin Liberty Senior | Pacer Cash vs. SPDR Bloomberg Convertible | Pacer Cash vs. Fidelity Preferred Securities |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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