Correlation Between First Trust and DBGR
Can any of the company-specific risk be diversified away by investing in both First Trust and DBGR 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 DBGR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Germany and DBGR, you can compare the effects of market volatilities on First Trust and DBGR 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 DBGR. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and DBGR.
Diversification Opportunities for First Trust and DBGR
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between First and DBGR is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Germany and DBGR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DBGR 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 Germany are associated (or correlated) with DBGR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DBGR has no effect on the direction of First Trust i.e., First Trust and DBGR go up and down completely randomly.
Pair Corralation between First Trust and DBGR
If you would invest 3,845 in First Trust Germany on September 1, 2024 and sell it today you would earn a total of 17.00 from holding First Trust Germany or generate 0.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
First Trust Germany vs. DBGR
Performance |
| Timeline |
| First Trust Germany |
| DBGR |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
First Trust and DBGR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and DBGR
The main advantage of trading using opposite First Trust and DBGR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, DBGR 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 DBGR will offset losses from the drop in DBGR's long position.| First Trust vs. First Trust Switzerland | First Trust vs. First Trust United | First Trust vs. First Trust Japan | First Trust vs. First Trust Latin |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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