Correlation Between First Trust and IPath Series
Can any of the company-specific risk be diversified away by investing in both First Trust and IPath Series 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 IPath Series 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 iPath Series B, you can compare the effects of market volatilities on First Trust and IPath Series 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 IPath Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and IPath Series.
Diversification Opportunities for First Trust and IPath Series
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between First and IPath is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Exchange Traded and iPath Series B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iPath Series B 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 IPath Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iPath Series B has no effect on the direction of First Trust i.e., First Trust and IPath Series go up and down completely randomly.
Pair Corralation between First Trust and IPath Series
Given the investment horizon of 90 days First Trust Exchange Traded is expected to generate 0.84 times more return on investment than IPath Series. However, First Trust Exchange Traded is 1.19 times less risky than IPath Series. It trades about 0.19 of its potential returns per unit of risk. iPath Series B is currently generating about -0.04 per unit of risk. If you would invest 3,035 in First Trust Exchange Traded on November 2, 2024 and sell it today you would earn a total of 152.00 from holding First Trust Exchange Traded or generate 5.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Exchange Traded vs. iPath Series B
Performance |
| Timeline |
| First Trust Exchange |
| iPath Series B |
First Trust and IPath Series Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and IPath Series
The main advantage of trading using opposite First Trust and IPath Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, IPath Series 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 IPath Series will offset losses from the drop in IPath Series' long position.| First Trust vs. American Century Quality | First Trust vs. T Rowe Price | First Trust vs. ClearBridge Large Cap | First Trust vs. Sterling Capital Focus |
| IPath Series vs. ProShares VIX Mid Term | IPath Series vs. ProShares VIX Short Term | IPath Series vs. iPath Series B | IPath Series vs. ProShares Short VIX |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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