Correlation Between Xtrackers Municipal and First Trust
Can any of the company-specific risk be diversified away by investing in both Xtrackers Municipal 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 Xtrackers Municipal and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers Municipal Infrastructure and First Trust Flexible, you can compare the effects of market volatilities on Xtrackers Municipal 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 Xtrackers Municipal with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers Municipal and First Trust.
Diversification Opportunities for Xtrackers Municipal and First Trust
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Xtrackers and First is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers Municipal Infrastruc and First Trust Flexible in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Flexible and Xtrackers Municipal 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 Xtrackers Municipal Infrastructure 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 Flexible has no effect on the direction of Xtrackers Municipal i.e., Xtrackers Municipal and First Trust go up and down completely randomly.
Pair Corralation between Xtrackers Municipal and First Trust
Given the investment horizon of 90 days Xtrackers Municipal Infrastructure is expected to generate 0.4 times more return on investment than First Trust. However, Xtrackers Municipal Infrastructure is 2.48 times less risky than First Trust. It trades about -0.03 of its potential returns per unit of risk. First Trust Flexible is currently generating about -0.02 per unit of risk. If you would invest 2,590 in Xtrackers Municipal Infrastructure on August 25, 2024 and sell it today you would lose (18.00) from holding Xtrackers Municipal Infrastructure or give up 0.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers Municipal Infrastruc vs. First Trust Flexible
Performance |
| Timeline |
| Xtrackers Municipal |
| First Trust Flexible |
Xtrackers Municipal and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers Municipal and First Trust
The main advantage of trading using opposite Xtrackers Municipal and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers Municipal 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.| Xtrackers Municipal vs. Franklin Liberty Intermediate | Xtrackers Municipal vs. IQ MacKay Municipal | Xtrackers Municipal vs. Hartford Municipal Opportunities | Xtrackers Municipal vs. IQ MacKay Municipal |
| First Trust vs. Franklin Liberty Intermediate | First Trust vs. IQ MacKay Municipal | First Trust vs. Xtrackers Municipal Infrastructure | First Trust vs. Hartford Municipal Opportunities |
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 Stocks Directory module to find actively traded stocks across global markets.
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