Correlation Between Exchange Traded and First Trust
Can any of the company-specific risk be diversified away by investing in both Exchange Traded 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 Exchange Traded and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Exchange Traded Concepts and First Trust, you can compare the effects of market volatilities on Exchange Traded 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 Exchange Traded with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exchange Traded and First Trust.
Diversification Opportunities for Exchange Traded and First Trust
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Exchange and First is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Exchange Traded Concepts and First Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust and Exchange Traded 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 Exchange Traded Concepts 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 has no effect on the direction of Exchange Traded i.e., Exchange Traded and First Trust go up and down completely randomly.
Pair Corralation between Exchange Traded and First Trust
If you would invest 2,793 in First Trust on August 28, 2024 and sell it today you would earn a total of 0.00 from holding First Trust or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Exchange Traded Concepts vs. First Trust
Performance |
| Timeline |
| Exchange Traded Concepts |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| First Trust |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Exchange Traded and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exchange Traded and First Trust
The main advantage of trading using opposite Exchange Traded and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exchange Traded 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.| Exchange Traded vs. Invesco DWA Utilities | Exchange Traded vs. Invesco Dynamic Large | Exchange Traded vs. Invesco Dynamic Large | Exchange Traded vs. HUMANA INC |
| First Trust vs. First Trust Multi | First Trust vs. First Trust Emerging | First Trust vs. First Trust Latin | First Trust vs. First Trust Emerging |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes |