Correlation Between First Trust and FlexShares Credit
Can any of the company-specific risk be diversified away by investing in both First Trust and FlexShares Credit 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 FlexShares Credit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Exchange Traded and FlexShares Credit Scored Long, you can compare the effects of market volatilities on First Trust and FlexShares Credit 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 FlexShares Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and FlexShares Credit.
Diversification Opportunities for First Trust and FlexShares Credit
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and FlexShares is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Exchange Traded and FlexShares Credit Scored Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShares Credit 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 Exchange Traded are associated (or correlated) with FlexShares Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShares Credit has no effect on the direction of First Trust i.e., First Trust and FlexShares Credit go up and down completely randomly.
Pair Corralation between First Trust and FlexShares Credit
Given the investment horizon of 90 days First Trust Exchange Traded is expected to generate 0.53 times more return on investment than FlexShares Credit. However, First Trust Exchange Traded is 1.88 times less risky than FlexShares Credit. It trades about 0.08 of its potential returns per unit of risk. FlexShares Credit Scored Long is currently generating about 0.03 per unit of risk. If you would invest 1,888 in First Trust Exchange Traded on September 1, 2024 and sell it today you would earn a total of 207.00 from holding First Trust Exchange Traded or generate 10.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 67.88% |
| Values | Daily Returns |
First Trust Exchange Traded vs. FlexShares Credit Scored Long
Performance |
| Timeline |
| First Trust Exchange |
| FlexShares Credit |
First Trust and FlexShares Credit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and FlexShares Credit
The main advantage of trading using opposite First Trust and FlexShares Credit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, FlexShares Credit 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 FlexShares Credit will offset losses from the drop in FlexShares Credit's long position.| First Trust vs. iShares ESG USD | First Trust vs. FlexShares Disciplined Duration | First Trust vs. iShares ESG 1 5 | First Trust vs. First Trust Emerging |
| FlexShares Credit vs. SPDR Barclays Long | FlexShares Credit vs. FlexShares Credit Scored Corporate | FlexShares Credit vs. FlexShares Disciplined Duration | FlexShares Credit vs. FlexShares Quality Large |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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