Correlation Between First Trust and ETFMG Prime
Can any of the company-specific risk be diversified away by investing in both First Trust and ETFMG Prime 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 ETFMG Prime into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust NASDAQ and ETFMG Prime Mobile, you can compare the effects of market volatilities on First Trust and ETFMG Prime 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 ETFMG Prime. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and ETFMG Prime.
Diversification Opportunities for First Trust and ETFMG Prime
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and ETFMG is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding First Trust NASDAQ and ETFMG Prime Mobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETFMG Prime Mobile 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 NASDAQ are associated (or correlated) with ETFMG Prime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETFMG Prime Mobile has no effect on the direction of First Trust i.e., First Trust and ETFMG Prime go up and down completely randomly.
Pair Corralation between First Trust and ETFMG Prime
Given the investment horizon of 90 days First Trust NASDAQ is expected to under-perform the ETFMG Prime. In addition to that, First Trust is 1.5 times more volatile than ETFMG Prime Mobile. It trades about -0.03 of its total potential returns per unit of risk. ETFMG Prime Mobile is currently generating about 0.01 per unit of volatility. If you would invest 4,637 in ETFMG Prime Mobile on January 19, 2024 and sell it today you would earn a total of 169.00 from holding ETFMG Prime Mobile or generate 3.64% 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 NASDAQ vs. ETFMG Prime Mobile
Performance |
| Timeline |
| First Trust NASDAQ |
| ETFMG Prime Mobile |
First Trust and ETFMG Prime Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and ETFMG Prime
The main advantage of trading using opposite First Trust and ETFMG Prime positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, ETFMG Prime 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 ETFMG Prime will offset losses from the drop in ETFMG Prime's long position.| First Trust vs. Invesco Global Listed | First Trust vs. VanEck BDC Income | First Trust vs. ProShares DJ Brookfield | First Trust vs. HUMANA INC |
| ETFMG Prime vs. Invesco Global Listed | ETFMG Prime vs. VanEck BDC Income | ETFMG Prime vs. ProShares DJ Brookfield | ETFMG Prime vs. HUMANA 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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