Correlation Between First Trust and MicroSectors Gold
Can any of the company-specific risk be diversified away by investing in both First Trust and MicroSectors Gold 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 MicroSectors Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Exchange Traded and MicroSectors Gold Miners, you can compare the effects of market volatilities on First Trust and MicroSectors Gold 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 MicroSectors Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and MicroSectors Gold.
Diversification Opportunities for First Trust and MicroSectors Gold
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and MicroSectors is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Exchange Traded and MicroSectors Gold Miners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MicroSectors Gold Miners 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 Exchange Traded are associated (or correlated) with MicroSectors Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MicroSectors Gold Miners has no effect on the direction of First Trust i.e., First Trust and MicroSectors Gold go up and down completely randomly.
Pair Corralation between First Trust and MicroSectors Gold
Given the investment horizon of 90 days First Trust is expected to generate 4.56 times less return on investment than MicroSectors Gold. But when comparing it to its historical volatility, First Trust Exchange Traded is 7.09 times less risky than MicroSectors Gold. It trades about 0.06 of its potential returns per unit of risk. MicroSectors Gold Miners is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 3,435 in MicroSectors Gold Miners on August 25, 2024 and sell it today you would earn a total of 510.00 from holding MicroSectors Gold Miners or generate 14.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Exchange Traded vs. MicroSectors Gold Miners
Performance |
| Timeline |
| First Trust Exchange |
| MicroSectors Gold Miners |
First Trust and MicroSectors Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and MicroSectors Gold
The main advantage of trading using opposite First Trust and MicroSectors Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, MicroSectors Gold 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 MicroSectors Gold will offset losses from the drop in MicroSectors Gold's long position.| First Trust vs. Global X Clean | First Trust vs. Global X Renewable | First Trust vs. Global X Thematic | First Trust vs. Global X AgTech |
| MicroSectors Gold vs. First Trust Exchange Traded | MicroSectors Gold vs. Ultimus Managers Trust | MicroSectors Gold vs. Horizon Kinetics Medical | MicroSectors Gold vs. Harbor Health Care |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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