Correlation Between US Treasury and First Trust
Can any of the company-specific risk be diversified away by investing in both US Treasury 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 US Treasury and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Treasury 12 and First Trust Consumer, you can compare the effects of market volatilities on US Treasury 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 US Treasury with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Treasury and First Trust.
Diversification Opportunities for US Treasury and First Trust
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between OBIL and First is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding US Treasury 12 and First Trust Consumer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Consumer and US Treasury 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 US Treasury 12 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 Consumer has no effect on the direction of US Treasury i.e., US Treasury and First Trust go up and down completely randomly.
Pair Corralation between US Treasury and First Trust
Given the investment horizon of 90 days US Treasury 12 is expected to generate 0.05 times more return on investment than First Trust. However, US Treasury 12 is 19.72 times less risky than First Trust. It trades about 0.51 of its potential returns per unit of risk. First Trust Consumer is currently generating about -0.09 per unit of risk. If you would invest 4,959 in US Treasury 12 on October 25, 2024 and sell it today you would earn a total of 54.00 from holding US Treasury 12 or generate 1.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
US Treasury 12 vs. First Trust Consumer
Performance |
| Timeline |
| US Treasury 12 |
| First Trust Consumer |
US Treasury and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Treasury and First Trust
The main advantage of trading using opposite US Treasury and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Treasury 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.| US Treasury vs. Rbb Fund | US Treasury vs. Rbb Fund | US Treasury vs. Rbb Fund | US Treasury vs. US Treasury 6 |
| First Trust vs. First Trust Consumer | First Trust vs. First Trust Health | First Trust vs. First Trust Utilities | First Trust vs. First Trust IndustrialsProducer |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios |