Correlation Between First Trust and AdvisorShares
Can any of the company-specific risk be diversified away by investing in both First Trust and AdvisorShares 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 AdvisorShares 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 AdvisorShares, you can compare the effects of market volatilities on First Trust and AdvisorShares 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 AdvisorShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and AdvisorShares.
Diversification Opportunities for First Trust and AdvisorShares
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and AdvisorShares is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Managed and AdvisorShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvisorShares 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 AdvisorShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdvisorShares has no effect on the direction of First Trust i.e., First Trust and AdvisorShares go up and down completely randomly.
Pair Corralation between First Trust and AdvisorShares
If you would invest 4,700 in First Trust Managed on September 2, 2024 and sell it today you would earn a total of 169.00 from holding First Trust Managed or generate 3.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
First Trust Managed vs. AdvisorShares
Performance |
| Timeline |
| First Trust Managed |
| AdvisorShares |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
First Trust and AdvisorShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and AdvisorShares
The main advantage of trading using opposite First Trust and AdvisorShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, AdvisorShares 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 AdvisorShares will offset losses from the drop in AdvisorShares' 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 |
| AdvisorShares vs. AdvisorShares Q Dynamic | AdvisorShares vs. Direxion Daily Dow | AdvisorShares vs. Main Thematic Innovation | AdvisorShares vs. AdvisorShares Vice ETF |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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