Correlation Between First Trust and Real Estate
Can any of the company-specific risk be diversified away by investing in both First Trust and Real Estate 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 Real Estate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Exchange Traded and The Real Estate, you can compare the effects of market volatilities on First Trust and Real Estate 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 Real Estate. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Real Estate.
Diversification Opportunities for First Trust and Real Estate
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between First and Real is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Exchange Traded and The Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Estate 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 Exchange Traded are associated (or correlated) with Real Estate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Estate has no effect on the direction of First Trust i.e., First Trust and Real Estate go up and down completely randomly.
Pair Corralation between First Trust and Real Estate
Given the investment horizon of 90 days First Trust Exchange Traded is expected to generate 0.2 times more return on investment than Real Estate. However, First Trust Exchange Traded is 4.89 times less risky than Real Estate. It trades about 0.17 of its potential returns per unit of risk. The Real Estate is currently generating about -0.02 per unit of risk. If you would invest 3,695 in First Trust Exchange Traded on November 1, 2024 and sell it today you would earn a total of 94.00 from holding First Trust Exchange Traded or generate 2.54% 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 Exchange Traded vs. The Real Estate
Performance |
| Timeline |
| First Trust Exchange |
| Real Estate |
First Trust and Real Estate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Real Estate
The main advantage of trading using opposite First Trust and Real Estate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Real Estate 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 Real Estate will offset losses from the drop in Real Estate's long position.| First Trust vs. First Trust Exchange | First Trust vs. First Trust Exchange Traded | First Trust vs. First Trust Exchange Traded | First Trust vs. FT Cboe Vest |
| Real Estate vs. Communication Services Select | Real Estate vs. Materials Select Sector | Real Estate vs. Industrial Select Sector | Real Estate vs. Consumer Discretionary Select |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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