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 Exchange Traded 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
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and Exchange is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Exchange Traded 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 Exchange Traded 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
Given the investment horizon of 90 days First Trust is expected to generate 72.19 times less return on investment than Exchange Traded. But when comparing it to its historical volatility, First Trust Exchange Traded is 3.74 times less risky than Exchange Traded. It trades about 0.01 of its potential returns per unit of risk. Exchange Traded Concepts is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 4,138 in Exchange Traded Concepts on September 3, 2024 and sell it today you would earn a total of 524.00 from holding Exchange Traded Concepts or generate 12.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Exchange Traded vs. Exchange Traded Concepts
Performance |
| Timeline |
| First Trust Exchange |
| Exchange Traded Concepts |
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. First Trust Exchange Traded | First Trust vs. First Trust Expanded | First Trust vs. BlackRock Future Health | First Trust vs. SPDR SP Health |
| Exchange Traded vs. Ultimus Managers Trust | Exchange Traded vs. American Beacon Select | Exchange Traded vs. Direxion Daily Regional | Exchange Traded vs. Direxion Daily SP |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |