Correlation Between First Trust and SPDR DoubleLine
Can any of the company-specific risk be diversified away by investing in both First Trust and SPDR DoubleLine 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 SPDR DoubleLine 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 SPDR DoubleLine Total, you can compare the effects of market volatilities on First Trust and SPDR DoubleLine 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 SPDR DoubleLine. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and SPDR DoubleLine.
Diversification Opportunities for First Trust and SPDR DoubleLine
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between First and SPDR is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding First Trust TCW and SPDR DoubleLine Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR DoubleLine Total 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 SPDR DoubleLine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR DoubleLine Total has no effect on the direction of First Trust i.e., First Trust and SPDR DoubleLine go up and down completely randomly.
Pair Corralation between First Trust and SPDR DoubleLine
Given the investment horizon of 90 days First Trust is expected to generate 1.57 times less return on investment than SPDR DoubleLine. But when comparing it to its historical volatility, First Trust TCW is 1.06 times less risky than SPDR DoubleLine. It trades about 0.04 of its potential returns per unit of risk. SPDR DoubleLine Total is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3,829 in SPDR DoubleLine Total on August 27, 2024 and sell it today you would earn a total of 160.00 from holding SPDR DoubleLine Total or generate 4.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust TCW vs. SPDR DoubleLine Total
Performance |
| Timeline |
| First Trust TCW |
| SPDR DoubleLine Total |
First Trust and SPDR DoubleLine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and SPDR DoubleLine
The main advantage of trading using opposite First Trust and SPDR DoubleLine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, SPDR DoubleLine 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 SPDR DoubleLine will offset losses from the drop in SPDR DoubleLine'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 |
| SPDR DoubleLine vs. PIMCO Active Bond | SPDR DoubleLine vs. SPDR Blackstone Senior | SPDR DoubleLine vs. SPDR Barclays Intermediate | SPDR DoubleLine vs. SPDR Bloomberg Investment |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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