Correlation Between ClearShares Ultra and First Trust
Can any of the company-specific risk be diversified away by investing in both ClearShares Ultra 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 ClearShares Ultra and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ClearShares Ultra Short Maturity and First Trust Low, you can compare the effects of market volatilities on ClearShares Ultra 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 ClearShares Ultra with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of ClearShares Ultra and First Trust.
Diversification Opportunities for ClearShares Ultra and First Trust
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ClearShares and First is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding ClearShares Ultra Short Maturi 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 ClearShares Ultra 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 ClearShares Ultra Short Maturity 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 ClearShares Ultra i.e., ClearShares Ultra and First Trust go up and down completely randomly.
Pair Corralation between ClearShares Ultra and First Trust
Given the investment horizon of 90 days ClearShares Ultra Short Maturity is expected to generate 0.09 times more return on investment than First Trust. However, ClearShares Ultra Short Maturity is 10.89 times less risky than First Trust. It trades about 0.96 of its potential returns per unit of risk. First Trust Low is currently generating about -0.04 per unit of risk. If you would invest 10,007 in ClearShares Ultra Short Maturity on August 27, 2024 and sell it today you would earn a total of 36.00 from holding ClearShares Ultra Short Maturity or generate 0.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ClearShares Ultra Short Maturi vs. First Trust Low
Performance |
| Timeline |
| ClearShares Ultra Short |
| First Trust Low |
ClearShares Ultra and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ClearShares Ultra and First Trust
The main advantage of trading using opposite ClearShares Ultra and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ClearShares Ultra 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.| ClearShares Ultra vs. First Trust Low | ClearShares Ultra vs. First Trust Senior | ClearShares Ultra vs. First Trust TCW | ClearShares Ultra vs. First Trust Tactical |
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.
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