Correlation Between First Trust and ASPY
Can any of the company-specific risk be diversified away by investing in both First Trust and ASPY 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 ASPY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust BuyWrite and ASPY, you can compare the effects of market volatilities on First Trust and ASPY 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 ASPY. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and ASPY.
Diversification Opportunities for First Trust and ASPY
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between First and ASPY is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding First Trust BuyWrite and ASPY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASPY 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 BuyWrite are associated (or correlated) with ASPY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASPY has no effect on the direction of First Trust i.e., First Trust and ASPY go up and down completely randomly.
Pair Corralation between First Trust and ASPY
If you would invest 2,156 in First Trust BuyWrite on September 2, 2024 and sell it today you would earn a total of 227.00 from holding First Trust BuyWrite or generate 10.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 0.79% |
| Values | Daily Returns |
First Trust BuyWrite vs. ASPY
Performance |
| Timeline |
| First Trust BuyWrite |
| ASPY |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
First Trust and ASPY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and ASPY
The main advantage of trading using opposite First Trust and ASPY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, ASPY 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 ASPY will offset losses from the drop in ASPY's long position.| First Trust vs. First Trust Emerging | First Trust vs. First Trust Managed | First Trust vs. First Trust Senior | First Trust vs. First Trust Income |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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