Correlation Between First Trust and Octane All
Can any of the company-specific risk be diversified away by investing in both First Trust and Octane All 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 Octane All into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Nasdaq and Octane All Cap Value, you can compare the effects of market volatilities on First Trust and Octane All 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 Octane All. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Octane All.
Diversification Opportunities for First Trust and Octane All
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and Octane is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Nasdaq and Octane All Cap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Octane All Cap 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 Nasdaq are associated (or correlated) with Octane All. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Octane All Cap has no effect on the direction of First Trust i.e., First Trust and Octane All go up and down completely randomly.
Pair Corralation between First Trust and Octane All
Given the investment horizon of 90 days First Trust Nasdaq is expected to under-perform the Octane All. But the etf apears to be less risky and, when comparing its historical volatility, First Trust Nasdaq is 1.01 times less risky than Octane All. The etf trades about -0.13 of its potential returns per unit of risk. The Octane All Cap Value is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 1,688 in Octane All Cap Value on October 9, 2024 and sell it today you would lose (7.00) from holding Octane All Cap Value or give up 0.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Nasdaq vs. Octane All Cap Value
Performance |
| Timeline |
| First Trust Nasdaq |
| Octane All Cap |
First Trust and Octane All Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Octane All
The main advantage of trading using opposite First Trust and Octane All positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Octane All 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 Octane All will offset losses from the drop in Octane All's long position.| First Trust vs. First Trust Nasdaq | First Trust vs. First Trust Nasdaq | First Trust vs. First Trust Nasdaq | First Trust vs. First Trust Nasdaq |
| Octane All vs. First Trust Nasdaq | Octane All vs. First Trust Nasdaq | Octane All vs. First Trust Nasdaq | Octane All vs. First Trust Nasdaq |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing |