Correlation Between First Trust and MAYBANK EMERGING
Can any of the company-specific risk be diversified away by investing in both First Trust and MAYBANK EMERGING 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 MAYBANK EMERGING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Emerging and MAYBANK EMERGING ETF, you can compare the effects of market volatilities on First Trust and MAYBANK EMERGING 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 MAYBANK EMERGING. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and MAYBANK EMERGING.
Diversification Opportunities for First Trust and MAYBANK EMERGING
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and MAYBANK is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Emerging and MAYBANK EMERGING ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAYBANK EMERGING ETF 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 Emerging are associated (or correlated) with MAYBANK EMERGING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAYBANK EMERGING ETF has no effect on the direction of First Trust i.e., First Trust and MAYBANK EMERGING go up and down completely randomly.
Pair Corralation between First Trust and MAYBANK EMERGING
Considering the 90-day investment horizon First Trust Emerging is expected to under-perform the MAYBANK EMERGING. But the etf apears to be less risky and, when comparing its historical volatility, First Trust Emerging is 1.03 times less risky than MAYBANK EMERGING. The etf trades about -0.03 of its potential returns per unit of risk. The MAYBANK EMERGING ETF is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,929 in MAYBANK EMERGING ETF on September 2, 2024 and sell it today you would earn a total of 246.00 from holding MAYBANK EMERGING ETF or generate 8.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Emerging vs. MAYBANK EMERGING ETF
Performance |
| Timeline |
| First Trust Emerging |
| MAYBANK EMERGING ETF |
First Trust and MAYBANK EMERGING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and MAYBANK EMERGING
The main advantage of trading using opposite First Trust and MAYBANK EMERGING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, MAYBANK EMERGING 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 MAYBANK EMERGING will offset losses from the drop in MAYBANK EMERGING's long position.| First Trust vs. First Trust Developed | First Trust vs. First Trust Emerging | First Trust vs. First Trust Europe | First Trust vs. First Trust Large |
| MAYBANK EMERGING vs. Xtrackers MSCI Emerging | MAYBANK EMERGING vs. FlexShares Morningstar Emerging | MAYBANK EMERGING vs. First Trust 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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