Correlation Between IQ Large and First Trust
Can any of the company-specific risk be diversified away by investing in both IQ Large 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 IQ Large and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IQ Large Cap and First Trust Exchange Traded, you can compare the effects of market volatilities on IQ Large 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 IQ Large with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of IQ Large and First Trust.
Diversification Opportunities for IQ Large and First Trust
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LRND and First is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding IQ Large Cap 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 IQ Large 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 IQ Large Cap 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 IQ Large i.e., IQ Large and First Trust go up and down completely randomly.
Pair Corralation between IQ Large and First Trust
Given the investment horizon of 90 days IQ Large Cap is expected to generate 3.2 times more return on investment than First Trust. However, IQ Large is 3.2 times more volatile than First Trust Exchange Traded. It trades about 0.07 of its potential returns per unit of risk. First Trust Exchange Traded is currently generating about 0.13 per unit of risk. If you would invest 3,108 in IQ Large Cap on November 28, 2024 and sell it today you would earn a total of 358.00 from holding IQ Large Cap or generate 11.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IQ Large Cap vs. First Trust Exchange Traded
Performance |
| Timeline |
| IQ Large Cap |
| First Trust Exchange |
IQ Large and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IQ Large and First Trust
The main advantage of trading using opposite IQ Large and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IQ Large 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.| IQ Large vs. FT Vest Equity | IQ Large vs. Northern Lights | IQ Large vs. Dimensional International High | IQ Large vs. First Trust Exchange Traded |
| First Trust vs. First Trust Exchange Traded | First Trust vs. First Trust Exchange Traded | First Trust vs. FT Cboe Vest | First Trust vs. FT Cboe Vest |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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