Correlation Between First Trust and SmartETFs Asia
Can any of the company-specific risk be diversified away by investing in both First Trust and SmartETFs Asia 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 SmartETFs Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Asia and SmartETFs Asia Pacific, you can compare the effects of market volatilities on First Trust and SmartETFs Asia 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 SmartETFs Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and SmartETFs Asia.
Diversification Opportunities for First Trust and SmartETFs Asia
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and SmartETFs is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Asia and SmartETFs Asia Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SmartETFs Asia Pacific 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 Asia are associated (or correlated) with SmartETFs Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SmartETFs Asia Pacific has no effect on the direction of First Trust i.e., First Trust and SmartETFs Asia go up and down completely randomly.
Pair Corralation between First Trust and SmartETFs Asia
Considering the 90-day investment horizon First Trust Asia is expected to generate 1.24 times more return on investment than SmartETFs Asia. However, First Trust is 1.24 times more volatile than SmartETFs Asia Pacific. It trades about -0.03 of its potential returns per unit of risk. SmartETFs Asia Pacific is currently generating about -0.14 per unit of risk. If you would invest 2,968 in First Trust Asia on January 16, 2025 and sell it today you would lose (93.00) from holding First Trust Asia or give up 3.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Asia vs. SmartETFs Asia Pacific
Performance |
| Timeline |
| First Trust Asia |
| SmartETFs Asia Pacific |
First Trust and SmartETFs Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and SmartETFs Asia
The main advantage of trading using opposite First Trust and SmartETFs Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, SmartETFs Asia 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 SmartETFs Asia will offset losses from the drop in SmartETFs Asia's long position.| First Trust vs. First Trust Japan | First Trust vs. First Trust Latin | First Trust vs. First Trust United | First Trust vs. First Trust Germany |
| SmartETFs Asia vs. SmartETFs Dividend Builder | SmartETFs Asia vs. Anfield Dynamic Fixed | SmartETFs Asia vs. Anfield Universal Fixed | SmartETFs Asia vs. Aptus Drawdown Managed |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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