Correlation Between SP 500 and FIRST TRUST
Can any of the company-specific risk be diversified away by investing in both SP 500 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 SP 500 and FIRST TRUST into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SP 500 VIX and FIRST TRUST GLOBAL, you can compare the effects of market volatilities on SP 500 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 SP 500 with a short position of FIRST TRUST. Check out your portfolio center. Please also check ongoing floating volatility patterns of SP 500 and FIRST TRUST.
Diversification Opportunities for SP 500 and FIRST TRUST
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between VILX and FIRST is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding SP 500 VIX and FIRST TRUST GLOBAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIRST TRUST GLOBAL and SP 500 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 SP 500 VIX 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 GLOBAL has no effect on the direction of SP 500 i.e., SP 500 and FIRST TRUST go up and down completely randomly.
Pair Corralation between SP 500 and FIRST TRUST
Assuming the 90 days trading horizon SP 500 VIX is expected to generate 101.52 times more return on investment than FIRST TRUST. However, SP 500 is 101.52 times more volatile than FIRST TRUST GLOBAL. It trades about 0.06 of its potential returns per unit of risk. FIRST TRUST GLOBAL is currently generating about 0.06 per unit of risk. If you would invest 123.00 in SP 500 VIX on November 8, 2024 and sell it today you would earn a total of 139,644 from holding SP 500 VIX or generate 113531.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
SP 500 VIX vs. FIRST TRUST GLOBAL
Performance |
| Timeline |
| SP 500 VIX |
| FIRST TRUST GLOBAL |
SP 500 and FIRST TRUST Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SP 500 and FIRST TRUST
The main advantage of trading using opposite SP 500 and FIRST TRUST positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SP 500 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.| SP 500 vs. iShares MSCI Japan | SP 500 vs. Amundi EUR High | SP 500 vs. iShares JP Morgan | SP 500 vs. Xtrackers MSCI |
| FIRST TRUST vs. Leverage Shares 3x | FIRST TRUST vs. GraniteShares 3x Short | FIRST TRUST vs. SP 500 VIX | FIRST TRUST vs. Leverage Shares 3x |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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