Correlation Between Invesco PHLX and First Trust
Can any of the company-specific risk be diversified away by investing in both Invesco PHLX 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 Invesco PHLX and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco PHLX Semiconductor and First Trust Nasdaq, you can compare the effects of market volatilities on Invesco PHLX 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 Invesco PHLX with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco PHLX and First Trust.
Diversification Opportunities for Invesco PHLX and First Trust
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Invesco and First is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Invesco PHLX Semiconductor and First Trust Nasdaq in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Nasdaq and Invesco PHLX 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 Invesco PHLX Semiconductor 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 Nasdaq has no effect on the direction of Invesco PHLX i.e., Invesco PHLX and First Trust go up and down completely randomly.
Pair Corralation between Invesco PHLX and First Trust
Given the investment horizon of 90 days Invesco PHLX Semiconductor is expected to under-perform the First Trust. In addition to that, Invesco PHLX is 1.72 times more volatile than First Trust Nasdaq. It trades about -0.1 of its total potential returns per unit of risk. First Trust Nasdaq is currently generating about 0.02 per unit of volatility. If you would invest 2,796 in First Trust Nasdaq on August 26, 2024 and sell it today you would earn a total of 13.00 from holding First Trust Nasdaq or generate 0.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco PHLX Semiconductor vs. First Trust Nasdaq
Performance |
| Timeline |
| Invesco PHLX Semicon |
| First Trust Nasdaq |
Invesco PHLX and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco PHLX and First Trust
The main advantage of trading using opposite Invesco PHLX and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco PHLX 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.| Invesco PHLX vs. Invesco DWA Utilities | Invesco PHLX vs. Invesco Dynamic Large | Invesco PHLX vs. Invesco Dynamic Large | Invesco PHLX vs. HUMANA INC |
| First Trust vs. First Trust Nasdaq | First Trust vs. First Trust Nasdaq | First Trust vs. First Trust Nasdaq | 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
Other Complementary Tools
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |