Correlation Between First Trust and EA Series
Can any of the company-specific risk be diversified away by investing in both First Trust and EA Series 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 EA Series 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 EA Series Trust, you can compare the effects of market volatilities on First Trust and EA Series 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 EA Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and EA Series.
Diversification Opportunities for First Trust and EA Series
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and STXE is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Emerging and EA Series Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EA Series Trust 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 EA Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EA Series Trust has no effect on the direction of First Trust i.e., First Trust and EA Series go up and down completely randomly.
Pair Corralation between First Trust and EA Series
Considering the 90-day investment horizon First Trust Emerging is expected to generate 1.15 times more return on investment than EA Series. However, First Trust is 1.15 times more volatile than EA Series Trust. It trades about 0.04 of its potential returns per unit of risk. EA Series Trust is currently generating about 0.04 per unit of risk. If you would invest 1,933 in First Trust Emerging on September 3, 2024 and sell it today you would earn a total of 322.00 from holding First Trust Emerging or generate 16.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 93.74% |
| Values | Daily Returns |
First Trust Emerging vs. EA Series Trust
Performance |
| Timeline |
| First Trust Emerging |
| EA Series Trust |
First Trust and EA Series Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and EA Series
The main advantage of trading using opposite First Trust and EA Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, EA Series 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 EA Series will offset losses from the drop in EA Series' 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 |
| EA Series vs. SCOR PK | EA Series vs. HUMANA INC | EA Series vs. Aquagold International | EA Series 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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