Correlation Between ETFis Series and First Trust
Can any of the company-specific risk be diversified away by investing in both ETFis Series 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 ETFis Series and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ETFis Series Trust and First Trust Tactical, you can compare the effects of market volatilities on ETFis Series 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 ETFis Series with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETFis Series and First Trust.
Diversification Opportunities for ETFis Series and First Trust
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between ETFis and First is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding ETFis Series Trust and First Trust Tactical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Tactical and ETFis Series 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 ETFis Series Trust 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 Tactical has no effect on the direction of ETFis Series i.e., ETFis Series and First Trust go up and down completely randomly.
Pair Corralation between ETFis Series and First Trust
Given the investment horizon of 90 days ETFis Series Trust is expected to under-perform the First Trust. In addition to that, ETFis Series is 3.19 times more volatile than First Trust Tactical. It trades about -0.12 of its total potential returns per unit of risk. First Trust Tactical is currently generating about 0.19 per unit of volatility. If you would invest 4,166 in First Trust Tactical on September 12, 2024 and sell it today you would earn a total of 30.50 from holding First Trust Tactical or generate 0.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ETFis Series Trust vs. First Trust Tactical
Performance |
| Timeline |
| ETFis Series Trust |
| First Trust Tactical |
ETFis Series and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETFis Series and First Trust
The main advantage of trading using opposite ETFis Series and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETFis Series 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.| ETFis Series vs. First Trust Tactical | ETFis Series vs. First Trust Senior | ETFis Series vs. SPDR ICE Preferred |
| First Trust vs. First Trust Senior | First Trust vs. First Trust Low | First Trust vs. First Trust Enhanced | First Trust vs. First Trust TCW |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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