Correlation Between First Trust and BTCI
Can any of the company-specific risk be diversified away by investing in both First Trust and BTCI 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 BTCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Dorsey and BTCI, you can compare the effects of market volatilities on First Trust and BTCI 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 BTCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and BTCI.
Diversification Opportunities for First Trust and BTCI
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and BTCI is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Dorsey and BTCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BTCI 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 Dorsey are associated (or correlated) with BTCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BTCI has no effect on the direction of First Trust i.e., First Trust and BTCI go up and down completely randomly.
Pair Corralation between First Trust and BTCI
Allowing for the 90-day total investment horizon First Trust is expected to generate 3.22 times less return on investment than BTCI. But when comparing it to its historical volatility, First Trust Dorsey is 2.24 times less risky than BTCI. It trades about 0.13 of its potential returns per unit of risk. BTCI is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 4,498 in BTCI on November 3, 2024 and sell it today you would earn a total of 1,884 from holding BTCI or generate 41.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 57.6% |
| Values | Daily Returns |
First Trust Dorsey vs. BTCI
Performance |
| Timeline |
| First Trust Dorsey |
| BTCI |
First Trust and BTCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and BTCI
The main advantage of trading using opposite First Trust and BTCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, BTCI 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 BTCI will offset losses from the drop in BTCI's long position.| First Trust vs. First Trust Dorsey | First Trust vs. Invesco DWA Momentum | First Trust vs. First Trust Capital | First Trust vs. First Trust Large |
| BTCI vs. Valkyrie Bitcoin Strategy | BTCI vs. Global X Blockchain | BTCI vs. Bitwise Crypto Industry | BTCI vs. VanEck Digital Transformation |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals |