Correlation Between First Trust and SPDR Bloomberg
Can any of the company-specific risk be diversified away by investing in both First Trust and SPDR Bloomberg 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 Bloomberg 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 SPDR Bloomberg Emerging, you can compare the effects of market volatilities on First Trust and SPDR Bloomberg 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 Bloomberg. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and SPDR Bloomberg.
Diversification Opportunities for First Trust and SPDR Bloomberg
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and SPDR is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Tactical and SPDR Bloomberg Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Bloomberg Emerging 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 SPDR Bloomberg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Bloomberg Emerging has no effect on the direction of First Trust i.e., First Trust and SPDR Bloomberg go up and down completely randomly.
Pair Corralation between First Trust and SPDR Bloomberg
Given the investment horizon of 90 days First Trust Tactical is expected to generate 0.4 times more return on investment than SPDR Bloomberg. However, First Trust Tactical is 2.51 times less risky than SPDR Bloomberg. It trades about 0.25 of its potential returns per unit of risk. SPDR Bloomberg Emerging is currently generating about 0.06 per unit of risk. If you would invest 3,953 in First Trust Tactical on September 14, 2024 and sell it today you would earn a total of 243.00 from holding First Trust Tactical or generate 6.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Tactical vs. SPDR Bloomberg Emerging
Performance |
| Timeline |
| First Trust Tactical |
| SPDR Bloomberg Emerging |
First Trust and SPDR Bloomberg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and SPDR Bloomberg
The main advantage of trading using opposite First Trust and SPDR Bloomberg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, SPDR Bloomberg 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 Bloomberg will offset losses from the drop in SPDR Bloomberg'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 |
| SPDR Bloomberg vs. Schwab Fundamental International | SPDR Bloomberg vs. Xtrackers International Real | SPDR Bloomberg vs. Schwab Fundamental Small | SPDR Bloomberg vs. Schwab Fundamental Emerging |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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