Correlation Between First Trust and GraniteShares HIPS
Can any of the company-specific risk be diversified away by investing in both First Trust and GraniteShares HIPS 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 GraniteShares HIPS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Dow and GraniteShares HIPS High, you can compare the effects of market volatilities on First Trust and GraniteShares HIPS 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 GraniteShares HIPS. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and GraniteShares HIPS.
Diversification Opportunities for First Trust and GraniteShares HIPS
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and GraniteShares is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Dow and GraniteShares HIPS High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GraniteShares HIPS High 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 Dow are associated (or correlated) with GraniteShares HIPS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GraniteShares HIPS High has no effect on the direction of First Trust i.e., First Trust and GraniteShares HIPS go up and down completely randomly.
Pair Corralation between First Trust and GraniteShares HIPS
Considering the 90-day investment horizon First Trust Dow is expected to generate 2.32 times more return on investment than GraniteShares HIPS. However, First Trust is 2.32 times more volatile than GraniteShares HIPS High. It trades about 0.33 of its potential returns per unit of risk. GraniteShares HIPS High is currently generating about 0.48 per unit of risk. If you would invest 22,153 in First Trust Dow on August 30, 2024 and sell it today you would earn a total of 2,004 from holding First Trust Dow or generate 9.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Dow vs. GraniteShares HIPS High
Performance |
| Timeline |
| First Trust Dow |
| GraniteShares HIPS High |
First Trust and GraniteShares HIPS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and GraniteShares HIPS
The main advantage of trading using opposite First Trust and GraniteShares HIPS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, GraniteShares HIPS 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 GraniteShares HIPS will offset losses from the drop in GraniteShares HIPS's long position.| First Trust vs. First Trust Cloud | First Trust vs. iShares Expanded Tech Software | First Trust vs. Invesco NASDAQ Internet | First Trust vs. First Trust NASDAQ 100 Technology |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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