Correlation Between First Trust and ProShares Online
Can any of the company-specific risk be diversified away by investing in both First Trust and ProShares Online 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 ProShares Online into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Consumer and ProShares Online Retail, you can compare the effects of market volatilities on First Trust and ProShares Online 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 ProShares Online. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and ProShares Online.
Diversification Opportunities for First Trust and ProShares Online
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and ProShares is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Consumer and ProShares Online Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Online Retail 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 Consumer are associated (or correlated) with ProShares Online. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Online Retail has no effect on the direction of First Trust i.e., First Trust and ProShares Online go up and down completely randomly.
Pair Corralation between First Trust and ProShares Online
Considering the 90-day investment horizon First Trust Consumer is expected to generate 0.82 times more return on investment than ProShares Online. However, First Trust Consumer is 1.22 times less risky than ProShares Online. It trades about 0.3 of its potential returns per unit of risk. ProShares Online Retail is currently generating about 0.18 per unit of risk. If you would invest 6,303 in First Trust Consumer on August 30, 2024 and sell it today you would earn a total of 437.00 from holding First Trust Consumer or generate 6.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
First Trust Consumer vs. ProShares Online Retail
Performance |
| Timeline |
| First Trust Consumer |
| ProShares Online Retail |
First Trust and ProShares Online Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and ProShares Online
The main advantage of trading using opposite First Trust and ProShares Online positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, ProShares Online 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 ProShares Online will offset losses from the drop in ProShares Online's long position.| First Trust vs. First Trust Consumer | First Trust vs. First Trust IndustrialsProducer | First Trust vs. First Trust Health | First Trust vs. First Trust Materials |
| ProShares Online vs. Amplify Online Retail | ProShares Online vs. ProShares Long OnlineShort | ProShares Online vs. Global X E commerce | ProShares Online vs. WisdomTree Cloud Computing |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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