Correlation Between Macquarie ETF and First Trust
Can any of the company-specific risk be diversified away by investing in both Macquarie ETF 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 Macquarie ETF and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Macquarie ETF Trust and First Trust Water, you can compare the effects of market volatilities on Macquarie ETF 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 Macquarie ETF with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie ETF and First Trust.
Diversification Opportunities for Macquarie ETF and First Trust
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Macquarie and First is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie ETF Trust and First Trust Water in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Water and Macquarie ETF 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 Macquarie ETF 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 Water has no effect on the direction of Macquarie ETF i.e., Macquarie ETF and First Trust go up and down completely randomly.
Pair Corralation between Macquarie ETF and First Trust
Given the investment horizon of 90 days Macquarie ETF Trust is expected to generate 1.0 times more return on investment than First Trust. However, Macquarie ETF is 1.0 times more volatile than First Trust Water. It trades about 0.14 of its potential returns per unit of risk. First Trust Water is currently generating about 0.13 per unit of risk. If you would invest 2,863 in Macquarie ETF Trust on August 27, 2024 and sell it today you would earn a total of 82.00 from holding Macquarie ETF Trust or generate 2.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Macquarie ETF Trust vs. First Trust Water
Performance |
| Timeline |
| Macquarie ETF Trust |
| First Trust Water |
Macquarie ETF and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Macquarie ETF and First Trust
The main advantage of trading using opposite Macquarie ETF and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macquarie ETF 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.| Macquarie ETF vs. EA Series Trust | Macquarie ETF vs. EA Series Trust | Macquarie ETF vs. Rumble Inc | Macquarie ETF vs. EA Series Trust |
| First Trust vs. Invesco SP Global | First Trust vs. Invesco Global Water | First Trust vs. Invesco Water Resources | First Trust vs. First Trust NASDAQ |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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