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 Exchange Traded, 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
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between FundX and First is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding FundX Investment Trust 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 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 Exchange 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 Trust is expected to generate 0.63 times more return on investment than First Trust. However, FundX Investment Trust is 1.59 times less risky than First Trust. It trades about 0.1 of its potential returns per unit of risk. First Trust Exchange Traded is currently generating about 0.05 per unit of risk. If you would invest 2,391 in FundX Investment Trust on September 12, 2024 and sell it today you would earn a total of 149.11 from holding FundX Investment Trust or generate 6.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
FundX Investment Trust vs. First Trust Exchange Traded
Performance |
| Timeline |
| FundX Investment Trust |
| First Trust Exchange |
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. First Trust Exchange Traded | FundX Investment vs. Vanguard Long Term Treasury | FundX Investment vs. Vanguard Short Term Treasury | FundX Investment vs. Columbia Multi Sector Municipal |
| First Trust vs. Vanguard Long Term Treasury | First Trust vs. Vanguard Short Term Treasury | First Trust vs. Columbia Multi Sector Municipal | First Trust vs. Morgan Stanley ETF |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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