Correlation Between First Trust and Managed Portfolio
Can any of the company-specific risk be diversified away by investing in both First Trust and Managed Portfolio 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 Managed Portfolio 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 Managed Portfolio Series, you can compare the effects of market volatilities on First Trust and Managed Portfolio 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 Managed Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Managed Portfolio.
Diversification Opportunities for First Trust and Managed Portfolio
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Managed is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Dorsey and Managed Portfolio Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Managed Portfolio Series 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 Managed Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Managed Portfolio Series has no effect on the direction of First Trust i.e., First Trust and Managed Portfolio go up and down completely randomly.
Pair Corralation between First Trust and Managed Portfolio
Considering the 90-day investment horizon First Trust Dorsey is expected to generate 2.5 times more return on investment than Managed Portfolio. However, First Trust is 2.5 times more volatile than Managed Portfolio Series. It trades about 0.05 of its potential returns per unit of risk. Managed Portfolio Series is currently generating about 0.08 per unit of risk. If you would invest 3,346 in First Trust Dorsey on November 5, 2024 and sell it today you would earn a total of 442.00 from holding First Trust Dorsey or generate 13.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Dorsey vs. Managed Portfolio Series
Performance |
| Timeline |
| First Trust Dorsey |
| Managed Portfolio Series |
First Trust and Managed Portfolio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Managed Portfolio
The main advantage of trading using opposite First Trust and Managed Portfolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Managed Portfolio 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 Managed Portfolio will offset losses from the drop in Managed Portfolio's long position.| First Trust vs. First Trust Dorsey | First Trust vs. First Trust Mid | First Trust vs. First Trust Small | First Trust vs. First Trust Dorsey |
| Managed Portfolio vs. Overlay Shares Foreign | Managed Portfolio vs. First Trust Vivaldi | Managed Portfolio vs. LeaderSharesTM AlphaFactor Core | Managed Portfolio vs. Overlay Shares Core |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |