Correlation Between First Trust and 6 Meridian
Can any of the company-specific risk be diversified away by investing in both First Trust and 6 Meridian 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 6 Meridian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Value and 6 Meridian Mega, you can compare the effects of market volatilities on First Trust and 6 Meridian 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 6 Meridian. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and 6 Meridian.
Diversification Opportunities for First Trust and 6 Meridian
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and SIXA is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Value and 6 Meridian Mega in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 6 Meridian Mega 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 Value are associated (or correlated) with 6 Meridian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 6 Meridian Mega has no effect on the direction of First Trust i.e., First Trust and 6 Meridian go up and down completely randomly.
Pair Corralation between First Trust and 6 Meridian
Considering the 90-day investment horizon First Trust is expected to generate 1.78 times less return on investment than 6 Meridian. In addition to that, First Trust is 1.06 times more volatile than 6 Meridian Mega. It trades about 0.08 of its total potential returns per unit of risk. 6 Meridian Mega is currently generating about 0.16 per unit of volatility. If you would invest 3,289 in 6 Meridian Mega on August 31, 2024 and sell it today you would earn a total of 1,372 from holding 6 Meridian Mega or generate 41.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Value vs. 6 Meridian Mega
Performance |
| Timeline |
| First Trust Value |
| 6 Meridian Mega |
First Trust and 6 Meridian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and 6 Meridian
The main advantage of trading using opposite First Trust and 6 Meridian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, 6 Meridian 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 6 Meridian will offset losses from the drop in 6 Meridian's long position.| First Trust vs. First Trust Morningstar | First Trust vs. First Trust Rising | First Trust vs. First Trust Capital | First Trust vs. WisdomTree LargeCap Dividend |
| 6 Meridian vs. iShares Core SP | 6 Meridian vs. iShares Core MSCI | 6 Meridian vs. iShares Broad USD | 6 Meridian vs. iShares Core SP |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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