Correlation Between AdvisorShares and First Trust
Can any of the company-specific risk be diversified away by investing in both AdvisorShares 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 AdvisorShares and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AdvisorShares and First Trust LongShort, you can compare the effects of market volatilities on AdvisorShares 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 AdvisorShares with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of AdvisorShares and First Trust.
Diversification Opportunities for AdvisorShares and First Trust
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between AdvisorShares and First is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding AdvisorShares and First Trust LongShort in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust LongShort and AdvisorShares 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 AdvisorShares 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 LongShort has no effect on the direction of AdvisorShares i.e., AdvisorShares and First Trust go up and down completely randomly.
Pair Corralation between AdvisorShares and First Trust
If you would invest 6,452 in First Trust LongShort on August 27, 2024 and sell it today you would earn a total of 111.00 from holding First Trust LongShort or generate 1.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 4.76% |
| Values | Daily Returns |
AdvisorShares vs. First Trust LongShort
Performance |
| Timeline |
| AdvisorShares |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| First Trust LongShort |
AdvisorShares and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AdvisorShares and First Trust
The main advantage of trading using opposite AdvisorShares and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AdvisorShares 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.| AdvisorShares vs. ProShares Online Retail | AdvisorShares vs. Amplify Online Retail | AdvisorShares vs. ProShares Decline of | AdvisorShares vs. Global X E commerce |
| First Trust vs. First Trust Managed | First Trust vs. IQ Hedge Multi Strategy | First Trust vs. First Trust BuyWrite | First Trust vs. SPDR SSgA Global |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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