Correlation Between First Trust and SPDR SP
Can any of the company-specific risk be diversified away by investing in both First Trust and SPDR SP 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 SPDR SP 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 SPDR SP 1500, you can compare the effects of market volatilities on First Trust and SPDR SP 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 SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and SPDR SP.
Diversification Opportunities for First Trust and SPDR SP
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and SPDR is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Value and SPDR SP 1500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP 1500 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 SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP 1500 has no effect on the direction of First Trust i.e., First Trust and SPDR SP go up and down completely randomly.
Pair Corralation between First Trust and SPDR SP
Considering the 90-day investment horizon First Trust is expected to generate 1.92 times less return on investment than SPDR SP. But when comparing it to its historical volatility, First Trust Value is 1.35 times less risky than SPDR SP. It trades about 0.19 of its potential returns per unit of risk. SPDR SP 1500 is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 18,544 in SPDR SP 1500 on August 29, 2024 and sell it today you would earn a total of 996.00 from holding SPDR SP 1500 or generate 5.37% 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. SPDR SP 1500
Performance |
| Timeline |
| First Trust Value |
| SPDR SP 1500 |
First Trust and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and SPDR SP
The main advantage of trading using opposite First Trust and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, SPDR SP 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 SPDR SP will offset losses from the drop in SPDR SP'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 |
| SPDR SP vs. BlackRock ETF Trust | SPDR SP vs. Rbb Fund | SPDR SP vs. Virtus ETF Trust | SPDR SP vs. Amplify CWP Enhanced |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Bonds Directory Find actively traded corporate debentures issued by US companies |