Correlation Between First Trust and XWEB
Can any of the company-specific risk be diversified away by investing in both First Trust and XWEB 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 XWEB 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 XWEB, you can compare the effects of market volatilities on First Trust and XWEB 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 XWEB. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and XWEB.
Diversification Opportunities for First Trust and XWEB
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and XWEB is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Dow and XWEB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XWEB 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 XWEB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XWEB has no effect on the direction of First Trust i.e., First Trust and XWEB go up and down completely randomly.
Pair Corralation between First Trust and XWEB
If you would invest 21,183 in First Trust Dow on August 30, 2024 and sell it today you would earn a total of 2,974 from holding First Trust Dow or generate 14.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 2.27% |
| Values | Daily Returns |
First Trust Dow vs. XWEB
Performance |
| Timeline |
| First Trust Dow |
| XWEB |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
First Trust and XWEB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and XWEB
The main advantage of trading using opposite First Trust and XWEB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, XWEB 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 XWEB will offset losses from the drop in XWEB'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 |
| XWEB vs. SPDR FactSet Innovative | XWEB vs. SPDR SP Software | XWEB vs. SPDR Morgan Stanley | XWEB vs. SPDR SP Health |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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