Correlation Between First Trust and US GASOLINE
Can any of the company-specific risk be diversified away by investing in both First Trust and US GASOLINE 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 US GASOLINE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Developed and US GASOLINE FUND, you can compare the effects of market volatilities on First Trust and US GASOLINE 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 US GASOLINE. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and US GASOLINE.
Diversification Opportunities for First Trust and US GASOLINE
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between First and UGA is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Developed and US GASOLINE FUND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US GASOLINE FUND 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 Developed are associated (or correlated) with US GASOLINE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US GASOLINE FUND has no effect on the direction of First Trust i.e., First Trust and US GASOLINE go up and down completely randomly.
Pair Corralation between First Trust and US GASOLINE
If you would invest 89,577 in First Trust Developed on September 23, 2024 and sell it today you would earn a total of 1,590 from holding First Trust Developed or generate 1.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Developed vs. US GASOLINE FUND
Performance |
| Timeline |
| First Trust Developed |
| US GASOLINE FUND |
First Trust and US GASOLINE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and US GASOLINE
The main advantage of trading using opposite First Trust and US GASOLINE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, US GASOLINE 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 US GASOLINE will offset losses from the drop in US GASOLINE's long position.| First Trust vs. Vanguard Index Funds | First Trust vs. Vanguard Index Funds | First Trust vs. Vanguard STAR Funds | First Trust vs. SPDR SP 500 |
| US GASOLINE vs. iShares Trust | US GASOLINE vs. Vanguard Funds Public | US GASOLINE vs. Vanguard Specialized Funds | US GASOLINE vs. First Trust Developed |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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