Correlation Between Capitol Series and First Trust
Can any of the company-specific risk be diversified away by investing in both Capitol Series and First Trust 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 Capitol Series and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capitol Series Trust and First Trust LongShort, you can compare the effects of market volatilities on Capitol Series and First Trust 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 Capitol Series with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capitol Series and First Trust.
Diversification Opportunities for Capitol Series and First Trust
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Capitol and First is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Capitol Series Trust and First Trust LongShort in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust LongShort and Capitol Series 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 Capitol Series Trust are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust LongShort has no effect on the direction of Capitol Series i.e., Capitol Series and First Trust go up and down completely randomly.
Pair Corralation between Capitol Series and First Trust
Given the investment horizon of 90 days Capitol Series Trust is expected to generate 1.56 times more return on investment than First Trust. However, Capitol Series is 1.56 times more volatile than First Trust LongShort. It trades about 0.11 of its potential returns per unit of risk. First Trust LongShort is currently generating about 0.12 per unit of risk. If you would invest 2,384 in Capitol Series Trust on November 28, 2024 and sell it today you would earn a total of 1,468 from holding Capitol Series Trust or generate 61.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Capitol Series Trust vs. First Trust LongShort
Performance |
| Timeline |
| Capitol Series Trust |
| First Trust LongShort |
Capitol Series and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capitol Series and First Trust
The main advantage of trading using opposite Capitol Series and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capitol Series position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| Capitol Series vs. First Trust LongShort | Capitol Series vs. Cambria Global Momentum | Capitol Series vs. Cambria Global Asset | Capitol Series vs. ProShares Hedge Replication |
| First Trust vs. First Trust Managed | First Trust vs. IQ Hedge Multi Strategy | First Trust vs. First Trust BuyWrite | First Trust vs. SPDR SSgA Global |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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