Correlation Between GraniteShares XOUT and First Trust
Can any of the company-specific risk be diversified away by investing in both GraniteShares XOUT 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 GraniteShares XOUT and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GraniteShares XOUT Large and First Trust Enhanced, you can compare the effects of market volatilities on GraniteShares XOUT 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 GraniteShares XOUT with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of GraniteShares XOUT and First Trust.
Diversification Opportunities for GraniteShares XOUT and First Trust
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GraniteShares and First is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding GraniteShares XOUT Large and First Trust Enhanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Enhanced and GraniteShares XOUT 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 GraniteShares XOUT Large 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 Enhanced has no effect on the direction of GraniteShares XOUT i.e., GraniteShares XOUT and First Trust go up and down completely randomly.
Pair Corralation between GraniteShares XOUT and First Trust
Given the investment horizon of 90 days GraniteShares XOUT Large is expected to generate 33.3 times more return on investment than First Trust. However, GraniteShares XOUT is 33.3 times more volatile than First Trust Enhanced. It trades about 0.1 of its potential returns per unit of risk. First Trust Enhanced is currently generating about 0.61 per unit of risk. If you would invest 3,417 in GraniteShares XOUT Large on October 20, 2024 and sell it today you would earn a total of 2,341 from holding GraniteShares XOUT Large or generate 68.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GraniteShares XOUT Large vs. First Trust Enhanced
Performance |
| Timeline |
| GraniteShares XOUT Large |
| First Trust Enhanced |
GraniteShares XOUT and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GraniteShares XOUT and First Trust
The main advantage of trading using opposite GraniteShares XOUT and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GraniteShares XOUT 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.| GraniteShares XOUT vs. Vanguard Information Technology | GraniteShares XOUT vs. Technology Select Sector | GraniteShares XOUT vs. iShares Technology ETF | GraniteShares XOUT vs. VanEck Semiconductor ETF |
| First Trust vs. First Trust Low | First Trust vs. First Trust Senior | First Trust vs. First Trust TCW | First Trust vs. First Trust Tactical |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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