Correlation Between WBI BullBear and First Trust
Can any of the company-specific risk be diversified away by investing in both WBI BullBear 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 WBI BullBear and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WBI BullBear Value and First Trust Exchange Traded, you can compare the effects of market volatilities on WBI BullBear 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 WBI BullBear with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of WBI BullBear and First Trust.
Diversification Opportunities for WBI BullBear and First Trust
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between WBI and First is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding WBI BullBear Value and First Trust Exchange Traded in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Exchange and WBI BullBear 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 WBI BullBear Value 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 Exchange has no effect on the direction of WBI BullBear i.e., WBI BullBear and First Trust go up and down completely randomly.
Pair Corralation between WBI BullBear and First Trust
Given the investment horizon of 90 days WBI BullBear Value is expected to generate 4.77 times more return on investment than First Trust. However, WBI BullBear is 4.77 times more volatile than First Trust Exchange Traded. It trades about 0.36 of its potential returns per unit of risk. First Trust Exchange Traded is currently generating about 0.42 per unit of risk. If you would invest 2,883 in WBI BullBear Value on September 2, 2024 and sell it today you would earn a total of 187.00 from holding WBI BullBear Value or generate 6.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
WBI BullBear Value vs. First Trust Exchange Traded
Performance |
| Timeline |
| WBI BullBear Value |
| First Trust Exchange |
WBI BullBear and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WBI BullBear and First Trust
The main advantage of trading using opposite WBI BullBear and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WBI BullBear 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.| WBI BullBear vs. FT Vest Equity | WBI BullBear vs. Northern Lights | WBI BullBear vs. Dimensional International High | WBI BullBear vs. Matthews China Discovery |
| First Trust vs. First Trust Exchange Traded | First Trust vs. First Trust Exchange Traded | First Trust vs. FT Cboe Vest | First Trust vs. FT Cboe Vest |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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