Correlation Between First Trust and Invesco RAFI
Can any of the company-specific risk be diversified away by investing in both First Trust and Invesco RAFI 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 RAFI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Canadian and Invesco RAFI Canadian, you can compare the effects of market volatilities on First Trust and Invesco RAFI 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 RAFI. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Invesco RAFI.
Diversification Opportunities for First Trust and Invesco RAFI
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and Invesco is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Canadian and Invesco RAFI Canadian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco RAFI Canadian 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 Canadian are associated (or correlated) with Invesco RAFI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco RAFI Canadian has no effect on the direction of First Trust i.e., First Trust and Invesco RAFI go up and down completely randomly.
Pair Corralation between First Trust and Invesco RAFI
Assuming the 90 days trading horizon First Trust is expected to generate 1.04 times less return on investment than Invesco RAFI. In addition to that, First Trust is 1.02 times more volatile than Invesco RAFI Canadian. It trades about 0.27 of its total potential returns per unit of risk. Invesco RAFI Canadian is currently generating about 0.29 per unit of volatility. If you would invest 5,286 in Invesco RAFI Canadian on October 11, 2025 and sell it today you would earn a total of 144.00 from holding Invesco RAFI Canadian or generate 2.72% 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 Canadian vs. Invesco RAFI Canadian
Performance |
| Timeline |
| First Trust Canadian |
| Invesco RAFI Canadian |
First Trust and Invesco RAFI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Invesco RAFI
The main advantage of trading using opposite First Trust and Invesco RAFI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Invesco RAFI 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 RAFI will offset losses from the drop in Invesco RAFI's long position.| First Trust vs. iShares ESG Equity | First Trust vs. iShares MSCI Min | First Trust vs. Invesco RAFI Canadian | First Trust vs. Desjardins RI Developed |
| Invesco RAFI vs. Fidelity International High | Invesco RAFI vs. iShares MSCI Min | Invesco RAFI vs. Fidelity Value Currency | Invesco RAFI vs. First Trust Canadian |
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 Channel module to use Commodity Channel Index to analyze current equity momentum.
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