Correlation Between First Trust and Xtrackers RREEF
Can any of the company-specific risk be diversified away by investing in both First Trust and Xtrackers RREEF 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 Xtrackers RREEF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Materials and Xtrackers RREEF Global, you can compare the effects of market volatilities on First Trust and Xtrackers RREEF 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 Xtrackers RREEF. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Xtrackers RREEF.
Diversification Opportunities for First Trust and Xtrackers RREEF
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Xtrackers is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Materials and Xtrackers RREEF Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers RREEF Global 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 Materials are associated (or correlated) with Xtrackers RREEF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers RREEF Global has no effect on the direction of First Trust i.e., First Trust and Xtrackers RREEF go up and down completely randomly.
Pair Corralation between First Trust and Xtrackers RREEF
Considering the 90-day investment horizon First Trust Materials is expected to under-perform the Xtrackers RREEF. In addition to that, First Trust is 1.1 times more volatile than Xtrackers RREEF Global. It trades about -0.15 of its total potential returns per unit of risk. Xtrackers RREEF Global is currently generating about 0.03 per unit of volatility. If you would invest 2,509 in Xtrackers RREEF Global on November 28, 2024 and sell it today you would earn a total of 16.00 from holding Xtrackers RREEF Global or generate 0.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Materials vs. Xtrackers RREEF Global
Performance |
| Timeline |
| First Trust Materials |
| Xtrackers RREEF Global |
First Trust and Xtrackers RREEF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Xtrackers RREEF
The main advantage of trading using opposite First Trust and Xtrackers RREEF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Xtrackers RREEF 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 Xtrackers RREEF will offset losses from the drop in Xtrackers RREEF's long position.| First Trust vs. First Trust IndustrialsProducer | First Trust vs. First Trust Consumer | First Trust vs. First Trust Financials | First Trust vs. First Trust Energy |
| Xtrackers RREEF vs. Direxion Daily Gold | Xtrackers RREEF vs. SPDR SP North | Xtrackers RREEF vs. Direxion Daily Gold | Xtrackers RREEF vs. iShares Global Timber |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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