Correlation Between First Trust and Xtrackers High
Can any of the company-specific risk be diversified away by investing in both First Trust and Xtrackers High 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 Xtrackers High 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 Xtrackers High Beta, you can compare the effects of market volatilities on First Trust and Xtrackers High 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 Xtrackers High. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Xtrackers High.
Diversification Opportunities for First Trust and Xtrackers High
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and Xtrackers is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding First Trust TCW and Xtrackers High Beta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers High Beta 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 Xtrackers High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers High Beta has no effect on the direction of First Trust i.e., First Trust and Xtrackers High go up and down completely randomly.
Pair Corralation between First Trust and Xtrackers High
Given the investment horizon of 90 days First Trust TCW is expected to under-perform the Xtrackers High. In addition to that, First Trust is 1.64 times more volatile than Xtrackers High Beta. It trades about -0.19 of its total potential returns per unit of risk. Xtrackers High Beta is currently generating about 0.17 per unit of volatility. If you would invest 4,196 in Xtrackers High Beta on August 25, 2024 and sell it today you would earn a total of 34.00 from holding Xtrackers High Beta or generate 0.81% 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 TCW vs. Xtrackers High Beta
Performance |
| Timeline |
| First Trust TCW |
| Xtrackers High Beta |
First Trust and Xtrackers High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Xtrackers High
The main advantage of trading using opposite First Trust and Xtrackers High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Xtrackers High 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 Xtrackers High will offset losses from the drop in Xtrackers High's 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 |
| Xtrackers High vs. First Trust Senior | Xtrackers High vs. First Trust Low | Xtrackers High vs. First Trust Enhanced | Xtrackers High 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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