Correlation Between First Trust and Virtus InfraCap
Can any of the company-specific risk be diversified away by investing in both First Trust and Virtus InfraCap 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 Virtus InfraCap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Preferred and Virtus InfraCap Preferred, you can compare the effects of market volatilities on First Trust and Virtus InfraCap 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 Virtus InfraCap. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Virtus InfraCap.
Diversification Opportunities for First Trust and Virtus InfraCap
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and Virtus is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Preferred and Virtus InfraCap Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus InfraCap Preferred 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 Preferred are associated (or correlated) with Virtus InfraCap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus InfraCap Preferred has no effect on the direction of First Trust i.e., First Trust and Virtus InfraCap go up and down completely randomly.
Pair Corralation between First Trust and Virtus InfraCap
Considering the 90-day investment horizon First Trust is expected to generate 1.56 times less return on investment than Virtus InfraCap. But when comparing it to its historical volatility, First Trust Preferred is 2.07 times less risky than Virtus InfraCap. It trades about 0.17 of its potential returns per unit of risk. Virtus InfraCap Preferred is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,734 in Virtus InfraCap Preferred on August 26, 2024 and sell it today you would earn a total of 512.00 from holding Virtus InfraCap Preferred or generate 29.53% 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 Preferred vs. Virtus InfraCap Preferred
Performance |
| Timeline |
| First Trust Preferred |
| Virtus InfraCap Preferred |
First Trust and Virtus InfraCap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Virtus InfraCap
The main advantage of trading using opposite First Trust and Virtus InfraCap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Virtus InfraCap 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 Virtus InfraCap will offset losses from the drop in Virtus InfraCap's long position.| First Trust vs. Invesco Variable Rate | First Trust vs. VanEck Preferred Securities | First Trust vs. First Trust Tactical | First Trust vs. First Trust Senior |
| Virtus InfraCap vs. ETF Series Solutions | Virtus InfraCap vs. Aquagold International | Virtus InfraCap vs. Morningstar Unconstrained Allocation | Virtus InfraCap vs. High Yield Municipal Fund |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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