Correlation Between First Trust and Invesco BulletShares
Can any of the company-specific risk be diversified away by investing in both First Trust and Invesco BulletShares 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 Invesco BulletShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust TCW and Invesco BulletShares 2026, you can compare the effects of market volatilities on First Trust and Invesco BulletShares 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 Invesco BulletShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Invesco BulletShares.
Diversification Opportunities for First Trust and Invesco BulletShares
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between First and Invesco is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding First Trust TCW and Invesco BulletShares 2026 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco BulletShares 2026 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 TCW are associated (or correlated) with Invesco BulletShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco BulletShares 2026 has no effect on the direction of First Trust i.e., First Trust and Invesco BulletShares go up and down completely randomly.
Pair Corralation between First Trust and Invesco BulletShares
Given the investment horizon of 90 days First Trust is expected to generate 1.7 times less return on investment than Invesco BulletShares. In addition to that, First Trust is 2.27 times more volatile than Invesco BulletShares 2026. It trades about 0.05 of its total potential returns per unit of risk. Invesco BulletShares 2026 is currently generating about 0.2 per unit of volatility. If you would invest 2,140 in Invesco BulletShares 2026 on August 26, 2024 and sell it today you would earn a total of 195.00 from holding Invesco BulletShares 2026 or generate 9.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust TCW vs. Invesco BulletShares 2026
Performance |
| Timeline |
| First Trust TCW |
| Invesco BulletShares 2026 |
First Trust and Invesco BulletShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Invesco BulletShares
The main advantage of trading using opposite First Trust and Invesco BulletShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Invesco BulletShares 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 Invesco BulletShares will offset losses from the drop in Invesco BulletShares' long position.| First Trust vs. First Trust Low | First Trust vs. First Trust Enhanced | First Trust vs. First Trust Tactical | First Trust vs. First Trust Managed |
| Invesco BulletShares vs. First Trust Senior | Invesco BulletShares vs. First Trust Low | Invesco BulletShares vs. First Trust Enhanced | Invesco BulletShares vs. First Trust TCW |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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