Correlation Between First Trust and EA Series
Can any of the company-specific risk be diversified away by investing in both First Trust and EA Series 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 EA Series into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Enhanced and EA Series Trust, you can compare the effects of market volatilities on First Trust and EA Series 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 EA Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and EA Series.
Diversification Opportunities for First Trust and EA Series
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and BUXX is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Enhanced and EA Series Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EA Series Trust 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 Enhanced are associated (or correlated) with EA Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EA Series Trust has no effect on the direction of First Trust i.e., First Trust and EA Series go up and down completely randomly.
Pair Corralation between First Trust and EA Series
Given the investment horizon of 90 days First Trust is expected to generate 1.26 times less return on investment than EA Series. But when comparing it to its historical volatility, First Trust Enhanced is 2.61 times less risky than EA Series. It trades about 0.6 of its potential returns per unit of risk. EA Series Trust is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 1,867 in EA Series Trust on September 1, 2024 and sell it today you would earn a total of 164.00 from holding EA Series Trust or generate 8.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 72.75% |
| Values | Daily Returns |
First Trust Enhanced vs. EA Series Trust
Performance |
| Timeline |
| First Trust Enhanced |
| EA Series Trust |
First Trust and EA Series Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and EA Series
The main advantage of trading using opposite First Trust and EA Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, EA Series 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 EA Series will offset losses from the drop in EA Series' long position.| First Trust vs. First Trust Low | First Trust vs. First Trust Senior | First Trust vs. First Trust TCW | First Trust vs. First Trust Tactical |
| EA Series vs. Valued Advisers Trust | EA Series vs. Columbia Diversified Fixed | EA Series vs. Principal Exchange Traded Funds | EA Series vs. Doubleline Etf Trust |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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