Correlation Between FundX Investment and First Trust
Can any of the company-specific risk be diversified away by investing in both FundX Investment 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 FundX Investment and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FundX Investment Trust and First Trust Multi Asset, you can compare the effects of market volatilities on FundX Investment 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 FundX Investment with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of FundX Investment and First Trust.
Diversification Opportunities for FundX Investment and First Trust
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between FundX and First is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding FundX Investment Trust and First Trust Multi Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Multi and FundX Investment 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 FundX Investment Trust 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 FundX Investment i.e., FundX Investment and First Trust go up and down completely randomly.
Pair Corralation between FundX Investment and First Trust
Given the investment horizon of 90 days FundX Investment is expected to generate 2.21 times less return on investment than First Trust. But when comparing it to its historical volatility, FundX Investment Trust is 1.45 times less risky than First Trust. It trades about 0.22 of its potential returns per unit of risk. First Trust Multi Asset is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 1,630 in First Trust Multi Asset on September 4, 2024 and sell it today you would earn a total of 48.00 from holding First Trust Multi Asset or generate 2.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FundX Investment Trust vs. First Trust Multi Asset
Performance |
| Timeline |
| FundX Investment Trust |
| First Trust Multi |
FundX Investment and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FundX Investment and First Trust
The main advantage of trading using opposite FundX Investment and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FundX Investment 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.| FundX Investment vs. NuShares Enhanced Yield | FundX Investment vs. Invesco Fundamental Investment | FundX Investment vs. Aquagold International | FundX Investment vs. Morningstar Unconstrained Allocation |
| First Trust vs. WisdomTree 9060 Balanced | First Trust vs. Aquagold International | First Trust vs. Morningstar Unconstrained Allocation | First Trust vs. High Yield Municipal Fund |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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