Correlation Between First Trust and Freedom Day
Can any of the company-specific risk be diversified away by investing in both First Trust and Freedom Day 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 Freedom Day into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust International and Freedom Day Dividend, you can compare the effects of market volatilities on First Trust and Freedom Day 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 Freedom Day. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Freedom Day.
Diversification Opportunities for First Trust and Freedom Day
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and Freedom is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding First Trust International and Freedom Day Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freedom Day Dividend 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 International are associated (or correlated) with Freedom Day. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freedom Day Dividend has no effect on the direction of First Trust i.e., First Trust and Freedom Day go up and down completely randomly.
Pair Corralation between First Trust and Freedom Day
Given the investment horizon of 90 days First Trust is expected to generate 2.91 times less return on investment than Freedom Day. But when comparing it to its historical volatility, First Trust International is 1.05 times less risky than Freedom Day. It trades about 0.05 of its potential returns per unit of risk. Freedom Day Dividend is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 2,503 in Freedom Day Dividend on August 28, 2024 and sell it today you would earn a total of 1,039 from holding Freedom Day Dividend or generate 41.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust International vs. Freedom Day Dividend
Performance |
| Timeline |
| First Trust International |
| Freedom Day Dividend |
First Trust and Freedom Day Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Freedom Day
The main advantage of trading using opposite First Trust and Freedom Day positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Freedom Day 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 Freedom Day will offset losses from the drop in Freedom Day's long position.| First Trust vs. Freedom Day Dividend | First Trust vs. Davis Select International | First Trust vs. iShares MSCI China | First Trust vs. SmartETFs Dividend Builder |
| Freedom Day vs. BlackRock ETF Trust | Freedom Day vs. Rbb Fund | Freedom Day vs. Virtus ETF Trust | Freedom Day vs. Amplify CWP Enhanced |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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