Correlation Between First Trust and Silver Bullion
Can any of the company-specific risk be diversified away by investing in both First Trust and Silver Bullion 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 Silver Bullion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Indxx and Silver Bullion Trust, you can compare the effects of market volatilities on First Trust and Silver Bullion 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 Silver Bullion. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Silver Bullion.
Diversification Opportunities for First Trust and Silver Bullion
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and Silver is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Indxx and Silver Bullion Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silver Bullion 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 Indxx are associated (or correlated) with Silver Bullion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silver Bullion Trust has no effect on the direction of First Trust i.e., First Trust and Silver Bullion go up and down completely randomly.
Pair Corralation between First Trust and Silver Bullion
Assuming the 90 days trading horizon First Trust Indxx is expected to generate 0.38 times more return on investment than Silver Bullion. However, First Trust Indxx is 2.61 times less risky than Silver Bullion. It trades about 0.12 of its potential returns per unit of risk. Silver Bullion Trust is currently generating about 0.03 per unit of risk. If you would invest 798.00 in First Trust Indxx on October 9, 2024 and sell it today you would earn a total of 400.00 from holding First Trust Indxx or generate 50.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Indxx vs. Silver Bullion Trust
Performance |
| Timeline |
| First Trust Indxx |
| Silver Bullion Trust |
First Trust and Silver Bullion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Silver Bullion
The main advantage of trading using opposite First Trust and Silver Bullion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Silver Bullion 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 Silver Bullion will offset losses from the drop in Silver Bullion's long position.| First Trust vs. First Trust Indxx | First Trust vs. First Trust Senior | First Trust vs. First Trust AlphaDEX | First Trust vs. First Trust Indxx |
| Silver Bullion vs. Global X Silver | Silver Bullion vs. iShares Gold Bullion | Silver Bullion vs. iShares MSCI Min |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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