Correlation Between First Trust and Evolve E
Can any of the company-specific risk be diversified away by investing in both First Trust and Evolve E 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 Evolve E into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust AlphaDEX and Evolve E Gaming Index, you can compare the effects of market volatilities on First Trust and Evolve E 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 Evolve E. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Evolve E.
Diversification Opportunities for First Trust and Evolve E
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between First and Evolve is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding First Trust AlphaDEX and Evolve E Gaming Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolve E Gaming 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 AlphaDEX are associated (or correlated) with Evolve E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolve E Gaming has no effect on the direction of First Trust i.e., First Trust and Evolve E go up and down completely randomly.
Pair Corralation between First Trust and Evolve E
Assuming the 90 days trading horizon First Trust AlphaDEX is expected to under-perform the Evolve E. In addition to that, First Trust is 1.02 times more volatile than Evolve E Gaming Index. It trades about -0.04 of its total potential returns per unit of risk. Evolve E Gaming Index is currently generating about 0.09 per unit of volatility. If you would invest 3,548 in Evolve E Gaming Index on December 29, 2024 and sell it today you would earn a total of 186.00 from holding Evolve E Gaming Index or generate 5.24% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
First Trust AlphaDEX vs. Evolve E Gaming Index
Performance |
Timeline |
First Trust AlphaDEX |
Evolve E Gaming |
First Trust and Evolve E Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with First Trust and Evolve E
The main advantage of trading using opposite First Trust and Evolve E positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Evolve E 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 Evolve E will offset losses from the drop in Evolve E's long position.First Trust vs. First Trust AlphaDEX | First Trust vs. FT AlphaDEX Industrials | First Trust vs. BMO Equal Weight | First Trust vs. iShares Global Healthcare |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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