Correlation Between Series Portfolios and First Trust
Can any of the company-specific risk be diversified away by investing in both Series Portfolios 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 Series Portfolios and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Series Portfolios Trust and First Trust Small, you can compare the effects of market volatilities on Series Portfolios 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 Series Portfolios with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Series Portfolios and First Trust.
Diversification Opportunities for Series Portfolios and First Trust
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Series and First is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Series Portfolios Trust and First Trust Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Small and Series Portfolios 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 Series Portfolios 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 Small has no effect on the direction of Series Portfolios i.e., Series Portfolios and First Trust go up and down completely randomly.
Pair Corralation between Series Portfolios and First Trust
Given the investment horizon of 90 days Series Portfolios Trust is expected to generate 0.84 times more return on investment than First Trust. However, Series Portfolios Trust is 1.19 times less risky than First Trust. It trades about -0.06 of its potential returns per unit of risk. First Trust Small is currently generating about -0.07 per unit of risk. If you would invest 3,318 in Series Portfolios Trust on January 26, 2024 and sell it today you would lose (44.00) from holding Series Portfolios Trust or give up 1.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Series Portfolios Trust vs. First Trust Small
Performance |
| Timeline |
| Series Portfolios Trust |
| First Trust Small |
Series Portfolios and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Series Portfolios and First Trust
The main advantage of trading using opposite Series Portfolios and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Series Portfolios 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.| Series Portfolios vs. OShares Quality Dividend | Series Portfolios vs. OShares Europe Quality | Series Portfolios vs. OShares Global Internet | Series Portfolios vs. ProShares SP MidCap |
| First Trust vs. Vanguard Mid Cap Growth | First Trust vs. Vanguard Small Cap Value | First Trust vs. Vanguard Mid Cap Value | First Trust vs. Vanguard Growth Index |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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