Correlation Between WBI Power and First Trust
Can any of the company-specific risk be diversified away by investing in both WBI Power 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 Power 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 Power Factor and First Trust Multi, you can compare the effects of market volatilities on WBI Power 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 Power with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of WBI Power and First Trust.
Diversification Opportunities for WBI Power and First Trust
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between WBI and First is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding WBI Power Factor and First Trust Multi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Multi and WBI Power 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 Power Factor 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 Multi has no effect on the direction of WBI Power i.e., WBI Power and First Trust go up and down completely randomly.
Pair Corralation between WBI Power and First Trust
Given the investment horizon of 90 days WBI Power Factor is expected to generate 0.99 times more return on investment than First Trust. However, WBI Power Factor is 1.01 times less risky than First Trust. It trades about 0.07 of its potential returns per unit of risk. First Trust Multi is currently generating about 0.07 per unit of risk. If you would invest 2,516 in WBI Power Factor on September 12, 2024 and sell it today you would earn a total of 635.50 from holding WBI Power Factor or generate 25.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
WBI Power Factor vs. First Trust Multi
Performance |
| Timeline |
| WBI Power Factor |
| First Trust Multi |
WBI Power and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WBI Power and First Trust
The main advantage of trading using opposite WBI Power and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WBI Power 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 Power vs. Freedom Day Dividend | WBI Power vs. Franklin Templeton ETF | WBI Power vs. iShares MSCI China | WBI Power vs. Tidal Trust II |
| First Trust vs. SPDR Portfolio Aggregate | First Trust vs. WBI Power Factor | First Trust vs. Global X MSCI | First Trust vs. HUMANA INC |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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