Correlation Between US GASOLINE and First Trust
Can any of the company-specific risk be diversified away by investing in both US GASOLINE 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 US GASOLINE and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US GASOLINE FUND and First Trust Developed, you can compare the effects of market volatilities on US GASOLINE 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 US GASOLINE with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of US GASOLINE and First Trust.
Diversification Opportunities for US GASOLINE and First Trust
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between UGA and First is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding US GASOLINE FUND and First Trust Developed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Developed and US GASOLINE 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 US GASOLINE FUND 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 Developed has no effect on the direction of US GASOLINE i.e., US GASOLINE and First Trust go up and down completely randomly.
Pair Corralation between US GASOLINE and First Trust
If you would invest 87,538 in First Trust Developed on September 22, 2024 and sell it today you would earn a total of 3,629 from holding First Trust Developed or generate 4.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
US GASOLINE FUND vs. First Trust Developed
Performance |
| Timeline |
| US GASOLINE FUND |
| First Trust Developed |
US GASOLINE and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US GASOLINE and First Trust
The main advantage of trading using opposite US GASOLINE and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US GASOLINE 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.| US GASOLINE vs. iShares Trust | US GASOLINE vs. First Trust Developed | US GASOLINE vs. iShares Trust | US GASOLINE vs. The Select Sector |
| First Trust vs. Vanguard Index Funds | First Trust vs. Vanguard Index Funds | First Trust vs. Vanguard STAR Funds | First Trust vs. SPDR SP 500 |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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