Correlation Between Listed Funds and First Trust
Can any of the company-specific risk be diversified away by investing in both Listed Funds 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 Listed Funds and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Listed Funds Trust and First Trust Exchange Traded, you can compare the effects of market volatilities on Listed Funds 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 Listed Funds with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Listed Funds and First Trust.
Diversification Opportunities for Listed Funds and First Trust
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Listed and First is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Listed Funds Trust and First Trust Exchange Traded in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Exchange and Listed Funds 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 Listed Funds Trust 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 Exchange has no effect on the direction of Listed Funds i.e., Listed Funds and First Trust go up and down completely randomly.
Pair Corralation between Listed Funds and First Trust
Given the investment horizon of 90 days Listed Funds Trust is expected to generate 2.44 times more return on investment than First Trust. However, Listed Funds is 2.44 times more volatile than First Trust Exchange Traded. It trades about 0.35 of its potential returns per unit of risk. First Trust Exchange Traded is currently generating about 0.03 per unit of risk. If you would invest 2,435 in Listed Funds Trust on September 3, 2024 and sell it today you would earn a total of 253.00 from holding Listed Funds Trust or generate 10.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Listed Funds Trust vs. First Trust Exchange Traded
Performance |
| Timeline |
| Listed Funds Trust |
| First Trust Exchange |
Listed Funds and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Listed Funds and First Trust
The main advantage of trading using opposite Listed Funds and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Listed Funds 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.| Listed Funds vs. Ultimus Managers Trust | Listed Funds vs. American Beacon Select | Listed Funds vs. Direxion Daily Regional | Listed Funds vs. Direxion Daily SP |
| First Trust vs. First Trust Exchange Traded | First Trust vs. First Trust Expanded | First Trust vs. BlackRock Future Health | First Trust vs. SPDR SP Health |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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