Correlation Between First Trust and IMGP DBi
Can any of the company-specific risk be diversified away by investing in both First Trust and IMGP DBi 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 IMGP DBi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust LongShort and iMGP DBi Managed, you can compare the effects of market volatilities on First Trust and IMGP DBi 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 IMGP DBi. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and IMGP DBi.
Diversification Opportunities for First Trust and IMGP DBi
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between First and IMGP is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding First Trust LongShort and iMGP DBi Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iMGP DBi Managed 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 LongShort are associated (or correlated) with IMGP DBi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iMGP DBi Managed has no effect on the direction of First Trust i.e., First Trust and IMGP DBi go up and down completely randomly.
Pair Corralation between First Trust and IMGP DBi
Given the investment horizon of 90 days First Trust LongShort is expected to generate 1.19 times more return on investment than IMGP DBi. However, First Trust is 1.19 times more volatile than iMGP DBi Managed. It trades about 0.25 of its potential returns per unit of risk. iMGP DBi Managed is currently generating about -0.05 per unit of risk. If you would invest 6,421 in First Trust LongShort on August 31, 2024 and sell it today you would earn a total of 178.00 from holding First Trust LongShort or generate 2.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust LongShort vs. iMGP DBi Managed
Performance |
| Timeline |
| First Trust LongShort |
| iMGP DBi Managed |
First Trust and IMGP DBi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and IMGP DBi
The main advantage of trading using opposite First Trust and IMGP DBi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, IMGP DBi 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 IMGP DBi will offset losses from the drop in IMGP DBi's long position.| First Trust vs. First Trust Managed | First Trust vs. IQ Hedge Multi Strategy | First Trust vs. First Trust BuyWrite | First Trust vs. SPDR SSgA Global |
| IMGP DBi vs. KFA Mount Lucas | IMGP DBi vs. Simplify Exchange Traded | IMGP DBi vs. Simplify Interest Rate | IMGP DBi vs. First Trust Managed |
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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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