Correlation Between First Trust and Exchange Traded
Can any of the company-specific risk be diversified away by investing in both First Trust and Exchange Traded 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 Exchange Traded 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 Exchange Traded Concepts, you can compare the effects of market volatilities on First Trust and Exchange Traded 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 Exchange Traded. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Exchange Traded.
Diversification Opportunities for First Trust and Exchange Traded
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Exchange is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Indxx and Exchange Traded Concepts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exchange Traded Concepts 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 Exchange Traded. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exchange Traded Concepts has no effect on the direction of First Trust i.e., First Trust and Exchange Traded go up and down completely randomly.
Pair Corralation between First Trust and Exchange Traded
If you would invest 4,140 in First Trust Indxx on November 3, 2024 and sell it today you would earn a total of 736.00 from holding First Trust Indxx or generate 17.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 1.6% |
| Values | Daily Returns |
First Trust Indxx vs. Exchange Traded Concepts
Performance |
| Timeline |
| First Trust Indxx |
| Exchange Traded Concepts |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
First Trust and Exchange Traded Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Exchange Traded
The main advantage of trading using opposite First Trust and Exchange Traded positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Exchange Traded 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 Exchange Traded will offset losses from the drop in Exchange Traded'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 |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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