Correlation Between First Trust and Series Portfolios
Can any of the company-specific risk be diversified away by investing in both First Trust and Series Portfolios 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 Series Portfolios 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 Series Portfolios Trust, you can compare the effects of market volatilities on First Trust and Series Portfolios 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 Series Portfolios. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Series Portfolios.
Diversification Opportunities for First Trust and Series Portfolios
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and Series is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Enhanced and Series Portfolios Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Series Portfolios 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 Series Portfolios. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Series Portfolios Trust has no effect on the direction of First Trust i.e., First Trust and Series Portfolios go up and down completely randomly.
Pair Corralation between First Trust and Series Portfolios
Given the investment horizon of 90 days First Trust is expected to generate 2.58 times less return on investment than Series Portfolios. But when comparing it to its historical volatility, First Trust Enhanced is 2.17 times less risky than Series Portfolios. It trades about 0.54 of its potential returns per unit of risk. Series Portfolios Trust is currently generating about 0.65 of returns per unit of risk over similar time horizon. If you would invest 2,537 in Series Portfolios Trust on September 1, 2024 and sell it today you would earn a total of 23.00 from holding Series Portfolios Trust or generate 0.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
First Trust Enhanced vs. Series Portfolios Trust
Performance |
| Timeline |
| First Trust Enhanced |
| Series Portfolios Trust |
First Trust and Series Portfolios Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Series Portfolios
The main advantage of trading using opposite First Trust and Series Portfolios positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Series Portfolios 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 Series Portfolios will offset losses from the drop in Series Portfolios' 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 |
| Series Portfolios vs. iShares Interest Rate | Series Portfolios vs. iShares Interest Rate | Series Portfolios vs. iShares Edge Investment | Series Portfolios vs. iShares Inflation Hedged |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
Other Complementary Tools
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |