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 Energy 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
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between First and DWS is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Energy 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 Energy 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 965.00 in DWS Municipal Income on August 27, 2024 and sell it today you would earn a total of 21.00 from holding DWS Municipal Income or generate 2.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 4.76% |
| Values | Daily Returns |
First Trust Energy vs. DWS Municipal Income
Performance |
| Timeline |
| First Trust Energy |
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. Eagle Point Income | First Trust vs. European Equity Closed | First Trust vs. John Hancock Income | First Trust vs. First Trust Intermediate |
| DWS Municipal vs. DTF Tax Free | DWS Municipal vs. Blackrock Muniyield Quality | DWS Municipal vs. Blackrock Muni Intermediate | DWS Municipal vs. Blackrock Muniholdings Quality |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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