Correlation Between First Trust and BTCI
Can any of the company-specific risk be diversified away by investing in both First Trust and BTCI 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 BTCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Indxx and BTCI, you can compare the effects of market volatilities on First Trust and BTCI 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 BTCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and BTCI.
Diversification Opportunities for First Trust and BTCI
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between First and BTCI is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Indxx and BTCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BTCI 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 Indxx are associated (or correlated) with BTCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BTCI has no effect on the direction of First Trust i.e., First Trust and BTCI go up and down completely randomly.
Pair Corralation between First Trust and BTCI
Given the investment horizon of 90 days First Trust is expected to generate 3.67 times less return on investment than BTCI. But when comparing it to its historical volatility, First Trust Indxx is 3.35 times less risky than BTCI. It trades about 0.15 of its potential returns per unit of risk. BTCI is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 6,061 in BTCI on October 20, 2024 and sell it today you would earn a total of 494.00 from holding BTCI or generate 8.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Indxx vs. BTCI
Performance |
| Timeline |
| First Trust Indxx |
| BTCI |
First Trust and BTCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and BTCI
The main advantage of trading using opposite First Trust and BTCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, BTCI 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 BTCI will offset losses from the drop in BTCI's long position.| First Trust vs. Siren Nasdaq NexGen | First Trust vs. Amplify Transformational Data | First Trust vs. Global X Blockchain | First Trust vs. VanEck Digital Transformation |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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