Correlation Between First Trust and ProShares Pet
Can any of the company-specific risk be diversified away by investing in both First Trust and ProShares Pet 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 First Trust and ProShares Pet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust NASDAQ and ProShares Pet Care, you can compare the effects of market volatilities on First Trust and ProShares Pet 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 First Trust with a short position of ProShares Pet. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and ProShares Pet.
Diversification Opportunities for First Trust and ProShares Pet
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and ProShares is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding First Trust NASDAQ and ProShares Pet Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Pet Care and First Trust 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 First Trust NASDAQ are associated (or correlated) with ProShares Pet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Pet Care has no effect on the direction of First Trust i.e., First Trust and ProShares Pet go up and down completely randomly.
Pair Corralation between First Trust and ProShares Pet
Given the investment horizon of 90 days First Trust NASDAQ is expected to under-perform the ProShares Pet. In addition to that, First Trust is 1.99 times more volatile than ProShares Pet Care. It trades about -0.03 of its total potential returns per unit of risk. ProShares Pet Care is currently generating about 0.03 per unit of volatility. If you would invest 4,974 in ProShares Pet Care on August 26, 2024 and sell it today you would earn a total of 745.00 from holding ProShares Pet Care or generate 14.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust NASDAQ vs. ProShares Pet Care
Performance |
| Timeline |
| First Trust NASDAQ |
| ProShares Pet Care |
First Trust and ProShares Pet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and ProShares Pet
The main advantage of trading using opposite First Trust and ProShares Pet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, ProShares Pet 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 ProShares Pet will offset losses from the drop in ProShares Pet's long position.| First Trust vs. ARK Autonomous Technology | First Trust vs. First Trust S Network | First Trust vs. FT Vest Equity | First Trust vs. Zillow Group Class |
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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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