Correlation Between First Trust and DWS Municipal
Can any of the company-specific risk be diversified away by investing in both First Trust and DWS Municipal 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 DWS Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Mlp and DWS Municipal Income, you can compare the effects of market volatilities on First Trust and DWS Municipal 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 DWS Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and DWS Municipal.
Diversification Opportunities for First Trust and DWS Municipal
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between First and DWS is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Mlp and DWS Municipal Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DWS Municipal Income 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 Mlp are associated (or correlated) with DWS Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DWS Municipal Income has no effect on the direction of First Trust i.e., First Trust and DWS Municipal go up and down completely randomly.
Pair Corralation between First Trust and DWS Municipal
If you would invest 897.00 in DWS Municipal Income on August 28, 2024 and sell it today you would earn a total of 95.00 from holding DWS Municipal Income or generate 10.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 0.79% |
| Values | Daily Returns |
First Trust Mlp vs. DWS Municipal Income
Performance |
| Timeline |
| First Trust Mlp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| DWS Municipal Income |
First Trust and DWS Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and DWS Municipal
The main advantage of trading using opposite First Trust and DWS Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, DWS Municipal 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 DWS Municipal will offset losses from the drop in DWS Municipal's long position.| First Trust vs. Franklin Templeton Limited | First Trust vs. Blackrock Floating Rate | First Trust vs. Cohen Steers Limited | First Trust vs. Eagle Point Income |
| DWS Municipal vs. Aurora Innovation | DWS Municipal vs. HUMANA INC | DWS Municipal vs. Aquagold International | DWS Municipal vs. Barloworld Ltd ADR |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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