Correlation Between USCF SummerHaven and First Trust
Can any of the company-specific risk be diversified away by investing in both USCF SummerHaven 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 USCF SummerHaven and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between USCF SummerHaven Dynamic and First Trust Alternative, you can compare the effects of market volatilities on USCF SummerHaven 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 USCF SummerHaven with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of USCF SummerHaven and First Trust.
Diversification Opportunities for USCF SummerHaven and First Trust
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between USCF and First is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding USCF SummerHaven Dynamic and First Trust Alternative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Alternative and USCF SummerHaven 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 USCF SummerHaven Dynamic 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 Alternative has no effect on the direction of USCF SummerHaven i.e., USCF SummerHaven and First Trust go up and down completely randomly.
Pair Corralation between USCF SummerHaven and First Trust
Given the investment horizon of 90 days USCF SummerHaven Dynamic is expected to generate 0.97 times more return on investment than First Trust. However, USCF SummerHaven Dynamic is 1.04 times less risky than First Trust. It trades about 0.11 of its potential returns per unit of risk. First Trust Alternative is currently generating about -0.04 per unit of risk. If you would invest 2,026 in USCF SummerHaven Dynamic on November 28, 2024 and sell it today you would earn a total of 33.00 from holding USCF SummerHaven Dynamic or generate 1.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
USCF SummerHaven Dynamic vs. First Trust Alternative
Performance |
| Timeline |
| USCF SummerHaven Dynamic |
| First Trust Alternative |
USCF SummerHaven and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with USCF SummerHaven and First Trust
The main advantage of trading using opposite USCF SummerHaven and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if USCF SummerHaven 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.| USCF SummerHaven vs. abrdn Bloomberg All | USCF SummerHaven vs. GraniteShares Bloomberg Commodity | USCF SummerHaven vs. iShares Bloomberg Roll | USCF SummerHaven vs. iShares Commodity Curve |
| First Trust vs. First Trust Emerging | First Trust vs. First Trust Income | First Trust vs. First Trust SSI | First Trust vs. First Trust Indxx |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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