Correlation Between YieldMax MSTR and First Trust
Can any of the company-specific risk be diversified away by investing in both YieldMax MSTR 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 YieldMax MSTR and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between YieldMax MSTR Option and First Trust Enhanced, you can compare the effects of market volatilities on YieldMax MSTR 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 YieldMax MSTR with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of YieldMax MSTR and First Trust.
Diversification Opportunities for YieldMax MSTR and First Trust
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between YieldMax and First is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding YieldMax MSTR Option and First Trust Enhanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Enhanced and YieldMax MSTR 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 YieldMax MSTR Option 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 Enhanced has no effect on the direction of YieldMax MSTR i.e., YieldMax MSTR and First Trust go up and down completely randomly.
Pair Corralation between YieldMax MSTR and First Trust
Given the investment horizon of 90 days YieldMax MSTR Option is expected to generate 12.46 times more return on investment than First Trust. However, YieldMax MSTR is 12.46 times more volatile than First Trust Enhanced. It trades about 0.21 of its potential returns per unit of risk. First Trust Enhanced is currently generating about 0.33 per unit of risk. If you would invest 2,610 in YieldMax MSTR Option on September 1, 2024 and sell it today you would earn a total of 791.00 from holding YieldMax MSTR Option or generate 30.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
YieldMax MSTR Option vs. First Trust Enhanced
Performance |
| Timeline |
| YieldMax MSTR Option |
| First Trust Enhanced |
YieldMax MSTR and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with YieldMax MSTR and First Trust
The main advantage of trading using opposite YieldMax MSTR and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YieldMax MSTR 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.| YieldMax MSTR vs. Tidal Trust II | YieldMax MSTR vs. Tidal Trust II | YieldMax MSTR vs. Direxion Daily META | YieldMax MSTR vs. Direxion Daily META |
| First Trust vs. Rivernorth Opportunistic Municipalome | First Trust vs. Blackrock Muni Intermediate | First Trust vs. Blackrock Muniholdings Ny | First Trust vs. Nuveen New York |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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