Correlation Between First Trust and FundX Investment
Can any of the company-specific risk be diversified away by investing in both First Trust and FundX Investment 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 FundX Investment 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 FundX Investment Trust, you can compare the effects of market volatilities on First Trust and FundX Investment 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 FundX Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and FundX Investment.
Diversification Opportunities for First Trust and FundX Investment
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and FundX is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Multi Asset and FundX Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FundX Investment Trust 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 FundX Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FundX Investment Trust has no effect on the direction of First Trust i.e., First Trust and FundX Investment go up and down completely randomly.
Pair Corralation between First Trust and FundX Investment
Given the investment horizon of 90 days First Trust Multi Asset is expected to generate 1.67 times more return on investment than FundX Investment. However, First Trust is 1.67 times more volatile than FundX Investment Trust. It trades about -0.04 of its potential returns per unit of risk. FundX Investment Trust is currently generating about -0.09 per unit of risk. If you would invest 1,571 in First Trust Multi Asset on January 7, 2025 and sell it today you would lose (61.00) from holding First Trust Multi Asset or give up 3.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.32% |
| Values | Daily Returns |
First Trust Multi Asset vs. FundX Investment Trust
Performance |
| Timeline |
| First Trust Multi |
| FundX Investment Trust |
First Trust and FundX Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and FundX Investment
The main advantage of trading using opposite First Trust and FundX Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, FundX Investment 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 FundX Investment will offset losses from the drop in FundX Investment'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 |
| FundX Investment vs. Draco Evolution AI | FundX Investment vs. The Advisors Inner | FundX Investment vs. Pinnacle Focused Opportunities | FundX Investment vs. WisdomTree Efficient Gold |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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