Correlation Between TrueShares Structured and First Trust
Can any of the company-specific risk be diversified away by investing in both TrueShares Structured 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 TrueShares Structured and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TrueShares Structured Outcome and First Trust TCW, you can compare the effects of market volatilities on TrueShares Structured 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 TrueShares Structured with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of TrueShares Structured and First Trust.
Diversification Opportunities for TrueShares Structured and First Trust
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between TrueShares and First is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding TrueShares Structured Outcome and First Trust TCW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust TCW and TrueShares Structured 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 TrueShares Structured Outcome 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 TCW has no effect on the direction of TrueShares Structured i.e., TrueShares Structured and First Trust go up and down completely randomly.
Pair Corralation between TrueShares Structured and First Trust
Given the investment horizon of 90 days TrueShares Structured Outcome is expected to generate 2.27 times more return on investment than First Trust. However, TrueShares Structured is 2.27 times more volatile than First Trust TCW. It trades about -0.09 of its potential returns per unit of risk. First Trust TCW is currently generating about -0.47 per unit of risk. If you would invest 3,916 in TrueShares Structured Outcome on October 9, 2024 and sell it today you would lose (53.80) from holding TrueShares Structured Outcome or give up 1.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
TrueShares Structured Outcome vs. First Trust TCW
Performance |
| Timeline |
| TrueShares Structured |
| First Trust TCW |
TrueShares Structured and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TrueShares Structured and First Trust
The main advantage of trading using opposite TrueShares Structured and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TrueShares Structured 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.| TrueShares Structured vs. FT Cboe Vest | TrueShares Structured vs. Innovator 20 Year | TrueShares Structured vs. FT Cboe Vest | TrueShares Structured vs. Strategy Shares NewfoundReSolve |
| First Trust vs. First Trust TCW | First Trust vs. First Trust TCW | First Trust vs. First Trust Ultra | First Trust vs. First Trust Short |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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