Correlation Between First Trust and ProShares Merger
Can any of the company-specific risk be diversified away by investing in both First Trust and ProShares Merger 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 ProShares Merger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Managed and ProShares Merger ETF, you can compare the effects of market volatilities on First Trust and ProShares Merger 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 ProShares Merger. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and ProShares Merger.
Diversification Opportunities for First Trust and ProShares Merger
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and ProShares is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Managed and ProShares Merger ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Merger ETF 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 Managed are associated (or correlated) with ProShares Merger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Merger ETF has no effect on the direction of First Trust i.e., First Trust and ProShares Merger go up and down completely randomly.
Pair Corralation between First Trust and ProShares Merger
Considering the 90-day investment horizon First Trust Managed is expected to generate 1.69 times more return on investment than ProShares Merger. However, First Trust is 1.69 times more volatile than ProShares Merger ETF. It trades about 0.38 of its potential returns per unit of risk. ProShares Merger ETF is currently generating about -0.06 per unit of risk. If you would invest 4,685 in First Trust Managed on September 3, 2024 and sell it today you would earn a total of 184.00 from holding First Trust Managed or generate 3.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Managed vs. ProShares Merger ETF
Performance |
| Timeline |
| First Trust Managed |
| ProShares Merger ETF |
First Trust and ProShares Merger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and ProShares Merger
The main advantage of trading using opposite First Trust and ProShares Merger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, ProShares Merger 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 ProShares Merger will offset losses from the drop in ProShares Merger's long position.| First Trust vs. WisdomTree Managed Futures | First Trust vs. First Trust LongShort | First Trust vs. First Trust Alternative | First Trust vs. iMGP DBi Managed |
| ProShares Merger vs. ProShares Hedge Replication | ProShares Merger vs. IQ Merger Arbitrage | ProShares Merger vs. ProShares Global Listed | ProShares Merger vs. ProShares Investment GradeInterest |
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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