Correlation Between First Trust and Xtrackers Russell
Can any of the company-specific risk be diversified away by investing in both First Trust and Xtrackers Russell 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 Xtrackers Russell 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 Xtrackers Russell Multifactor, you can compare the effects of market volatilities on First Trust and Xtrackers Russell 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 Xtrackers Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Xtrackers Russell.
Diversification Opportunities for First Trust and Xtrackers Russell
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and Xtrackers is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Dorsey and Xtrackers Russell Multifactor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers Russell 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 Xtrackers Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers Russell has no effect on the direction of First Trust i.e., First Trust and Xtrackers Russell go up and down completely randomly.
Pair Corralation between First Trust and Xtrackers Russell
Allowing for the 90-day total investment horizon First Trust is expected to generate 1.01 times less return on investment than Xtrackers Russell. In addition to that, First Trust is 1.33 times more volatile than Xtrackers Russell Multifactor. It trades about 0.28 of its total potential returns per unit of risk. Xtrackers Russell Multifactor is currently generating about 0.38 per unit of volatility. If you would invest 5,413 in Xtrackers Russell Multifactor on September 1, 2024 and sell it today you would earn a total of 401.00 from holding Xtrackers Russell Multifactor or generate 7.41% 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 Dorsey vs. Xtrackers Russell Multifactor
Performance |
| Timeline |
| First Trust Dorsey |
| Xtrackers Russell |
First Trust and Xtrackers Russell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Xtrackers Russell
The main advantage of trading using opposite First Trust and Xtrackers Russell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Xtrackers Russell 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 Xtrackers Russell will offset losses from the drop in Xtrackers Russell'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 |
| Xtrackers Russell vs. Xtrackers FTSE Developed | Xtrackers Russell vs. John Hancock Multifactor | Xtrackers Russell vs. Xtrackers MSCI All | Xtrackers Russell vs. Xtrackers MSCI Eurozone |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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