Correlation Between First Trust and PeakShares Sector
Can any of the company-specific risk be diversified away by investing in both First Trust and PeakShares Sector 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 PeakShares Sector into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Multi Asset and PeakShares Sector Rotation, you can compare the effects of market volatilities on First Trust and PeakShares Sector 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 PeakShares Sector. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and PeakShares Sector.
Diversification Opportunities for First Trust and PeakShares Sector
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between First and PeakShares is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Multi Asset and PeakShares Sector Rotation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PeakShares Sector 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 Multi Asset are associated (or correlated) with PeakShares Sector. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PeakShares Sector has no effect on the direction of First Trust i.e., First Trust and PeakShares Sector go up and down completely randomly.
Pair Corralation between First Trust and PeakShares Sector
Given the investment horizon of 90 days First Trust Multi Asset is expected to under-perform the PeakShares Sector. But the etf apears to be less risky and, when comparing its historical volatility, First Trust Multi Asset is 1.99 times less risky than PeakShares Sector. The etf trades about -0.01 of its potential returns per unit of risk. The PeakShares Sector Rotation is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,842 in PeakShares Sector Rotation on September 12, 2024 and sell it today you would earn a total of 22.00 from holding PeakShares Sector Rotation or generate 0.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Multi Asset vs. PeakShares Sector Rotation
Performance |
| Timeline |
| First Trust Multi |
| PeakShares Sector |
First Trust and PeakShares Sector Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and PeakShares Sector
The main advantage of trading using opposite First Trust and PeakShares Sector positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, PeakShares Sector 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 PeakShares Sector will offset losses from the drop in PeakShares Sector's long position.| First Trust vs. Global X SuperIncome | First Trust vs. iShares Morningstar Multi Asset | First Trust vs. Invesco CEF Income | First Trust vs. VanEck Fallen Angel |
| PeakShares Sector vs. Freedom Day Dividend | PeakShares Sector vs. Franklin Templeton ETF | PeakShares Sector vs. iShares MSCI China | PeakShares Sector vs. Tidal Trust II |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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