Correlation Between First Trust and Invesco Exchange
Can any of the company-specific risk be diversified away by investing in both First Trust and Invesco Exchange 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 Invesco Exchange into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Tactical and Invesco Exchange Traded Self Indexed, you can compare the effects of market volatilities on First Trust and Invesco Exchange 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 Invesco Exchange. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Invesco Exchange.
Diversification Opportunities for First Trust and Invesco Exchange
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and Invesco is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Tactical and Invesco Exchange Traded Self I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Exchange Traded 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 Tactical are associated (or correlated) with Invesco Exchange. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Exchange Traded has no effect on the direction of First Trust i.e., First Trust and Invesco Exchange go up and down completely randomly.
Pair Corralation between First Trust and Invesco Exchange
Given the investment horizon of 90 days First Trust Tactical is expected to generate 0.76 times more return on investment than Invesco Exchange. However, First Trust Tactical is 1.31 times less risky than Invesco Exchange. It trades about -0.12 of its potential returns per unit of risk. Invesco Exchange Traded Self Indexed is currently generating about -0.13 per unit of risk. If you would invest 4,093 in First Trust Tactical on January 13, 2025 and sell it today you would lose (73.00) from holding First Trust Tactical or give up 1.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Tactical vs. Invesco Exchange Traded Self I
Performance |
| Timeline |
| First Trust Tactical |
| Invesco Exchange Traded |
First Trust and Invesco Exchange Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Invesco Exchange
The main advantage of trading using opposite First Trust and Invesco Exchange positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Invesco Exchange 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 Invesco Exchange will offset losses from the drop in Invesco Exchange's long position.| First Trust vs. First Trust Senior | First Trust vs. First Trust Low | First Trust vs. First Trust Enhanced | First Trust vs. First Trust TCW |
| Invesco Exchange vs. Invesco Exchange Traded Self Indexed | Invesco Exchange vs. Invesco BulletShares 2029 | Invesco Exchange vs. Invesco BulletShares 2028 | Invesco Exchange vs. Invesco BulletShares 2027 |
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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