Correlation Between First Trust and MFUT
Can any of the company-specific risk be diversified away by investing in both First Trust and MFUT 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 MFUT 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 MFUT, you can compare the effects of market volatilities on First Trust and MFUT 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 MFUT. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and MFUT.
Diversification Opportunities for First Trust and MFUT
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between First and MFUT is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Dorsey and MFUT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFUT 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 MFUT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFUT has no effect on the direction of First Trust i.e., First Trust and MFUT go up and down completely randomly.
Pair Corralation between First Trust and MFUT
Allowing for the 90-day total investment horizon First Trust Dorsey is expected to generate 2.08 times more return on investment than MFUT. However, First Trust is 2.08 times more volatile than MFUT. It trades about 0.19 of its potential returns per unit of risk. MFUT is currently generating about -0.06 per unit of risk. If you would invest 5,819 in First Trust Dorsey on August 25, 2024 and sell it today you would earn a total of 297.00 from holding First Trust Dorsey or generate 5.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Dorsey vs. MFUT
Performance |
| Timeline |
| First Trust Dorsey |
| MFUT |
First Trust and MFUT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and MFUT
The main advantage of trading using opposite First Trust and MFUT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, MFUT 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 MFUT will offset losses from the drop in MFUT'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 |
| MFUT vs. Tidal Trust II | MFUT vs. Tidal Trust II | MFUT vs. First Trust Dorsey | MFUT vs. Direxion Daily META |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
Other Complementary Tools
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA |