Correlation Between First Trust and KBND
Can any of the company-specific risk be diversified away by investing in both First Trust and KBND 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 KBND 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 KBND, you can compare the effects of market volatilities on First Trust and KBND 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 KBND. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and KBND.
Diversification Opportunities for First Trust and KBND
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between First and KBND is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding First Trust BuyWrite and KBND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KBND 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 KBND. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KBND has no effect on the direction of First Trust i.e., First Trust and KBND go up and down completely randomly.
Pair Corralation between First Trust and KBND
If you would invest 2,361 in First Trust BuyWrite on September 13, 2024 and sell it today you would earn a total of 41.00 from holding First Trust BuyWrite or generate 1.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 4.76% |
| Values | Daily Returns |
First Trust BuyWrite vs. KBND
Performance |
| Timeline |
| First Trust BuyWrite |
| KBND |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
First Trust and KBND Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and KBND
The main advantage of trading using opposite First Trust and KBND positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, KBND 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 KBND will offset losses from the drop in KBND's long position.| First Trust vs. Global X SP | First Trust vs. Amplify CWP Enhanced | First Trust vs. JPMorgan Nasdaq Equity | First Trust vs. NEOS ETF Trust |
| KBND vs. First Trust SSI | KBND vs. First Trust BuyWrite | KBND vs. First Trust Managed | KBND vs. First Trust Tactical |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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