Correlation Between First Trust and Bitwise 10

Can any of the company-specific risk be diversified away by investing in both First Trust and Bitwise 10 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 Bitwise 10 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between First Trust Mortgage and Bitwise 10 Crypto, you can compare the effects of market volatilities on First Trust and Bitwise 10 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 Bitwise 10. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Bitwise 10.

Diversification Opportunities for First Trust and Bitwise 10

-0.64

Correlation Coefficient

First Trust  Bitwise 10

Excellent diversification

The 3 months correlation between First and Bitwise is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Mortgage and Bitwise 10 Crypto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bitwise 10 Crypto 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 Mortgage are associated (or correlated) with Bitwise 10. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bitwise 10 Crypto has no effect on the direction of First Trust i.e., First Trust and Bitwise 10 go up and down completely randomly.

Pair Corralation between First Trust and Bitwise 10

Considering the 90-day investment horizon First Trust Mortgage is expected to generate 0.22 times more return on investment than Bitwise 10. However, First Trust Mortgage is 4.57 times less risky than Bitwise 10. It trades about 0.08 of its potential returns per unit of risk. Bitwise 10 Crypto is currently generating about -0.05 per unit of risk. If you would invest  1,175  in First Trust Mortgage on December 28, 2024 and sell it today you would earn a total of  40.00  from holding First Trust Mortgage or generate 3.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

First Trust Mortgage  vs.  Bitwise 10 Crypto

First Trust Mortgage

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Mortgage are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, First Trust is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Bitwise 10 Crypto

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bitwise 10 Crypto has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest unsteady performance, the Fund's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the fund sophisticated investors.

Pair Trading with First Trust and Bitwise 10

The main advantage of trading using opposite First Trust and Bitwise 10 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Bitwise 10 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 Bitwise 10 will offset losses from the drop in Bitwise 10's long position.

The idea behind First Trust Mortgage and Bitwise 10 Crypto pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.