Correlation Between First Trust and WisdomTree Interest
Can any of the company-specific risk be diversified away by investing in both First Trust and WisdomTree Interest 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 First Trust and WisdomTree Interest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust TCW and WisdomTree Interest Rate, you can compare the effects of market volatilities on First Trust and WisdomTree Interest 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 First Trust with a short position of WisdomTree Interest. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and WisdomTree Interest.
Diversification Opportunities for First Trust and WisdomTree Interest
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between First and WisdomTree is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding First Trust TCW and WisdomTree Interest Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Interest Rate and First Trust 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 First Trust TCW are associated (or correlated) with WisdomTree Interest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Interest Rate has no effect on the direction of First Trust i.e., First Trust and WisdomTree Interest go up and down completely randomly.
Pair Corralation between First Trust and WisdomTree Interest
Given the investment horizon of 90 days First Trust is expected to generate 2.39 times less return on investment than WisdomTree Interest. But when comparing it to its historical volatility, First Trust TCW is 1.12 times less risky than WisdomTree Interest. It trades about 0.05 of its potential returns per unit of risk. WisdomTree Interest Rate is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,227 in WisdomTree Interest Rate on August 30, 2024 and sell it today you would earn a total of 13.00 from holding WisdomTree Interest Rate or generate 0.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust TCW vs. WisdomTree Interest Rate
Performance |
| Timeline |
| First Trust TCW |
| WisdomTree Interest Rate |
First Trust and WisdomTree Interest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and WisdomTree Interest
The main advantage of trading using opposite First Trust and WisdomTree Interest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, WisdomTree Interest 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 WisdomTree Interest will offset losses from the drop in WisdomTree Interest's long position.| First Trust vs. First Trust TCW | First Trust vs. First Trust Low | First Trust vs. First Trust Enhanced | First Trust vs. First Trust Senior |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |