Correlation Between First Trust and Meta Platforms
Can any of the company-specific risk be diversified away by investing in both First Trust and Meta Platforms 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 Meta Platforms into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Dow and Meta Platforms, you can compare the effects of market volatilities on First Trust and Meta Platforms 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 Meta Platforms. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Meta Platforms.
Diversification Opportunities for First Trust and Meta Platforms
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and Meta is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Dow and Meta Platforms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meta Platforms 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 Dow are associated (or correlated) with Meta Platforms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meta Platforms has no effect on the direction of First Trust i.e., First Trust and Meta Platforms go up and down completely randomly.
Pair Corralation between First Trust and Meta Platforms
Considering the 90-day investment horizon First Trust Dow is expected to generate 0.54 times more return on investment than Meta Platforms. However, First Trust Dow is 1.84 times less risky than Meta Platforms. It trades about 0.04 of its potential returns per unit of risk. Meta Platforms is currently generating about -0.13 per unit of risk. If you would invest 14,712 in First Trust Dow on January 26, 2024 and sell it today you would earn a total of 5,045 from holding First Trust Dow or generate 34.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 7.29% |
| Values | Daily Returns |
First Trust Dow vs. Meta Platforms
Performance |
| Timeline |
| First Trust Dow |
| Meta Platforms |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
First Trust and Meta Platforms Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Meta Platforms
The main advantage of trading using opposite First Trust and Meta Platforms positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Meta Platforms 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 Meta Platforms will offset losses from the drop in Meta Platforms' long position.| First Trust vs. OShares Quality Dividend | First Trust vs. Aquagold International | First Trust vs. Morningstar Unconstrained Allocation | First Trust vs. High Yield Municipal Fund |
| Meta Platforms vs. Meta Platforms | Meta Platforms vs. Alphabet Inc Class A | Meta Platforms vs. Twilio Inc | Meta Platforms vs. Snap 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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