Correlation Between Roundhill Investments and First Trust
Can any of the company-specific risk be diversified away by investing in both Roundhill Investments 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 Roundhill Investments and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Roundhill Investments and First Trust Low, you can compare the effects of market volatilities on Roundhill Investments 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 Roundhill Investments with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roundhill Investments and First Trust.
Diversification Opportunities for Roundhill Investments and First Trust
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Roundhill and First is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Roundhill Investments and First Trust Low in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Low and Roundhill Investments 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 Roundhill Investments 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 Low has no effect on the direction of Roundhill Investments i.e., Roundhill Investments and First Trust go up and down completely randomly.
Pair Corralation between Roundhill Investments and First Trust
Given the investment horizon of 90 days Roundhill Investments is expected to generate 12.03 times more return on investment than First Trust. However, Roundhill Investments is 12.03 times more volatile than First Trust Low. It trades about 0.08 of its potential returns per unit of risk. First Trust Low is currently generating about 0.09 per unit of risk. If you would invest 3,091 in Roundhill Investments on August 24, 2024 and sell it today you would earn a total of 975.00 from holding Roundhill Investments or generate 31.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 32.12% |
| Values | Daily Returns |
Roundhill Investments vs. First Trust Low
Performance |
| Timeline |
| Roundhill Investments |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| First Trust Low |
Roundhill Investments and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Roundhill Investments and First Trust
The main advantage of trading using opposite Roundhill Investments and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roundhill Investments 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.| Roundhill Investments vs. SoFi Social 50 | Roundhill Investments vs. Global X Blockchain | Roundhill Investments vs. Tuttle Capital Short |
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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