Correlation Between First Trust and ETFis Series
Can any of the company-specific risk be diversified away by investing in both First Trust and ETFis Series 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 ETFis Series 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 ETFis Series Trust, you can compare the effects of market volatilities on First Trust and ETFis Series 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 ETFis Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and ETFis Series.
Diversification Opportunities for First Trust and ETFis Series
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and ETFis is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Preferred and ETFis Series Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETFis Series Trust 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 ETFis Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETFis Series Trust has no effect on the direction of First Trust i.e., First Trust and ETFis Series go up and down completely randomly.
Pair Corralation between First Trust and ETFis Series
Considering the 90-day investment horizon First Trust Preferred is expected to generate 0.45 times more return on investment than ETFis Series. However, First Trust Preferred is 2.21 times less risky than ETFis Series. It trades about 0.08 of its potential returns per unit of risk. ETFis Series Trust is currently generating about -0.06 per unit of risk. If you would invest 1,768 in First Trust Preferred on November 3, 2024 and sell it today you would earn a total of 9.00 from holding First Trust Preferred or generate 0.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Preferred vs. ETFis Series Trust
Performance |
| Timeline |
| First Trust Preferred |
| ETFis Series Trust |
First Trust and ETFis Series Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and ETFis Series
The main advantage of trading using opposite First Trust and ETFis Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, ETFis Series 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 ETFis Series will offset losses from the drop in ETFis Series' 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 |
| ETFis Series vs. Virtus InfraCap Preferred | ETFis Series vs. VanEck Preferred Securities | ETFis Series vs. Global X Preferred | ETFis Series vs. Innovator SP 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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