Correlation Between First Trust and SPDR MSCI
Can any of the company-specific risk be diversified away by investing in both First Trust and SPDR MSCI 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 SPDR MSCI 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 SPDR MSCI World, you can compare the effects of market volatilities on First Trust and SPDR MSCI 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 SPDR MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and SPDR MSCI.
Diversification Opportunities for First Trust and SPDR MSCI
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between First and SPDR is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Developed and SPDR MSCI World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR MSCI World 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 SPDR MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR MSCI World has no effect on the direction of First Trust i.e., First Trust and SPDR MSCI go up and down completely randomly.
Pair Corralation between First Trust and SPDR MSCI
Given the investment horizon of 90 days First Trust Developed is expected to under-perform the SPDR MSCI. In addition to that, First Trust is 2.01 times more volatile than SPDR MSCI World. It trades about 0.0 of its total potential returns per unit of risk. SPDR MSCI World is currently generating about 0.1 per unit of volatility. If you would invest 11,754 in SPDR MSCI World on September 3, 2024 and sell it today you would earn a total of 1,262 from holding SPDR MSCI World or generate 10.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Developed vs. SPDR MSCI World
Performance |
| Timeline |
| First Trust Developed |
| SPDR MSCI World |
First Trust and SPDR MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and SPDR MSCI
The main advantage of trading using opposite First Trust and SPDR MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, SPDR MSCI 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 SPDR MSCI will offset losses from the drop in SPDR MSCI's long position.| First Trust vs. First Trust Asia | First Trust vs. First Trust United | First Trust vs. First Trust Germany | First Trust vs. First Trust Japan |
| SPDR MSCI vs. SmartETFs Asia Pacific | SPDR MSCI vs. Listed Funds Trust | SPDR MSCI vs. iShares AsiaPacific Dividend | SPDR MSCI vs. ProShares MSCI Emerging |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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