Correlation Between First Trust and Invesco Preferred
Can any of the company-specific risk be diversified away by investing in both First Trust and Invesco Preferred 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 Invesco Preferred 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 Invesco Preferred ETF, you can compare the effects of market volatilities on First Trust and Invesco Preferred 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 Invesco Preferred. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Invesco Preferred.
Diversification Opportunities for First Trust and Invesco Preferred
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between First and Invesco is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Preferred and Invesco Preferred ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Preferred 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 Preferred are associated (or correlated) with Invesco Preferred. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Preferred ETF has no effect on the direction of First Trust i.e., First Trust and Invesco Preferred go up and down completely randomly.
Pair Corralation between First Trust and Invesco Preferred
Considering the 90-day investment horizon First Trust Preferred is expected to generate 0.47 times more return on investment than Invesco Preferred. However, First Trust Preferred is 2.14 times less risky than Invesco Preferred. It trades about 0.18 of its potential returns per unit of risk. Invesco Preferred ETF is currently generating about 0.08 per unit of risk. If you would invest 1,692 in First Trust Preferred on September 1, 2024 and sell it today you would earn a total of 95.00 from holding First Trust Preferred or generate 5.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Preferred vs. Invesco Preferred ETF
Performance |
| Timeline |
| First Trust Preferred |
| Invesco Preferred ETF |
First Trust and Invesco Preferred Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Invesco Preferred
The main advantage of trading using opposite First Trust and Invesco Preferred positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Invesco Preferred 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 Invesco Preferred will offset losses from the drop in Invesco Preferred'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 |
| Invesco Preferred vs. Invesco Financial Preferred | Invesco Preferred vs. iShares Preferred and | Invesco Preferred vs. VanEck Preferred Securities | Invesco Preferred vs. SPDR ICE Preferred |
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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |