Correlation Between US Global and First Trust
Can any of the company-specific risk be diversified away by investing in both US Global 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 US Global and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Global Jets and First Trust IndustrialsProducer, you can compare the effects of market volatilities on US Global 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 US Global with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Global and First Trust.
Diversification Opportunities for US Global and First Trust
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between JETS and First is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding US Global Jets and First Trust IndustrialsProduce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Industri and US Global 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 US Global Jets 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 Industri has no effect on the direction of US Global i.e., US Global and First Trust go up and down completely randomly.
Pair Corralation between US Global and First Trust
Given the investment horizon of 90 days US Global is expected to generate 1.11 times less return on investment than First Trust. In addition to that, US Global is 1.36 times more volatile than First Trust IndustrialsProducer. It trades about 0.16 of its total potential returns per unit of risk. First Trust IndustrialsProducer is currently generating about 0.24 per unit of volatility. If you would invest 7,617 in First Trust IndustrialsProducer on August 24, 2024 and sell it today you would earn a total of 510.00 from holding First Trust IndustrialsProducer or generate 6.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
US Global Jets vs. First Trust IndustrialsProduce
Performance |
| Timeline |
| US Global Jets |
| First Trust Industri |
US Global and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Global and First Trust
The main advantage of trading using opposite US Global and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Global 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.| US Global vs. Invesco Solar ETF | US Global vs. iShares Global Clean | US Global vs. iShares Semiconductor ETF | US Global vs. Amplify ETF Trust |
| First Trust vs. First Trust Consumer | First Trust vs. First Trust Materials | First Trust vs. First Trust Financials | First Trust vs. First Trust Technology |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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