Correlation Between First Trust and AdvisorShares STAR
Can any of the company-specific risk be diversified away by investing in both First Trust and AdvisorShares STAR 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 AdvisorShares STAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust International and AdvisorShares STAR Global, you can compare the effects of market volatilities on First Trust and AdvisorShares STAR 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 AdvisorShares STAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and AdvisorShares STAR.
Diversification Opportunities for First Trust and AdvisorShares STAR
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between First and AdvisorShares is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding First Trust International and AdvisorShares STAR Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvisorShares STAR Global 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 International are associated (or correlated) with AdvisorShares STAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdvisorShares STAR Global has no effect on the direction of First Trust i.e., First Trust and AdvisorShares STAR go up and down completely randomly.
Pair Corralation between First Trust and AdvisorShares STAR
Given the investment horizon of 90 days First Trust International is expected to generate 1.78 times more return on investment than AdvisorShares STAR. However, First Trust is 1.78 times more volatile than AdvisorShares STAR Global. It trades about 0.11 of its potential returns per unit of risk. AdvisorShares STAR Global is currently generating about 0.14 per unit of risk. If you would invest 4,440 in First Trust International on February 18, 2024 and sell it today you would earn a total of 305.00 from holding First Trust International or generate 6.87% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
First Trust International vs. AdvisorShares STAR Global
Performance |
Timeline |
First Trust International |
AdvisorShares STAR Global |
First Trust and AdvisorShares STAR Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with First Trust and AdvisorShares STAR
The main advantage of trading using opposite First Trust and AdvisorShares STAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, AdvisorShares STAR 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 AdvisorShares STAR will offset losses from the drop in AdvisorShares STAR's long position.First Trust vs. American Century ETF | First Trust vs. TrueShares Technology AI | First Trust vs. JPMorgan USD Emerging | First Trust vs. PIMCO RAFI Dynamic |
AdvisorShares STAR vs. First Trust Emerging | AdvisorShares STAR vs. First Trust Managed | AdvisorShares STAR vs. First Trust Senior | AdvisorShares STAR vs. First Trust Income |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
Other Complementary Tools
Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |