Correlation Between Jacob Forward and First Trust
Can any of the company-specific risk be diversified away by investing in both Jacob Forward 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 Jacob Forward and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jacob Forward ETF and First Trust Mid, you can compare the effects of market volatilities on Jacob Forward 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 Jacob Forward with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jacob Forward and First Trust.
Diversification Opportunities for Jacob Forward and First Trust
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Jacob and First is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Jacob Forward ETF and First Trust Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Mid and Jacob Forward 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 Jacob Forward ETF 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 Mid has no effect on the direction of Jacob Forward i.e., Jacob Forward and First Trust go up and down completely randomly.
Pair Corralation between Jacob Forward and First Trust
Given the investment horizon of 90 days Jacob Forward ETF is expected to generate 1.84 times more return on investment than First Trust. However, Jacob Forward is 1.84 times more volatile than First Trust Mid. It trades about 0.21 of its potential returns per unit of risk. First Trust Mid is currently generating about 0.19 per unit of risk. If you would invest 1,028 in Jacob Forward ETF on September 12, 2024 and sell it today you would earn a total of 277.30 from holding Jacob Forward ETF or generate 26.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jacob Forward ETF vs. First Trust Mid
Performance |
| Timeline |
| Jacob Forward ETF |
| First Trust Mid |
Jacob Forward and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jacob Forward and First Trust
The main advantage of trading using opposite Jacob Forward and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jacob Forward 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.| Jacob Forward vs. Vanguard Mid Cap Growth | Jacob Forward vs. Vanguard Small Cap Value | Jacob Forward vs. Vanguard Mid Cap Value | Jacob Forward vs. Vanguard Growth Index |
| First Trust vs. Vanguard Mid Cap Growth | First Trust vs. iShares Russell Mid Cap | First Trust vs. iShares SP Mid Cap | First Trust vs. iShares Morningstar Mid Cap |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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