Correlation Between First Trust and USCF ETF

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

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

Diversification Opportunities for First Trust and USCF ETF

0.37

Correlation Coefficient

First Trust  USCF ETF

Weak diversification

The 3 months correlation between First and USCF is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Global and USCF ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USCF ETF Trust 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 Global are associated (or correlated) with USCF ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USCF ETF Trust has no effect on the direction of First Trust i.e., First Trust and USCF ETF go up and down completely randomly.

Pair Corralation between First Trust and USCF ETF

Given the investment horizon of 90 days First Trust Global is expected to generate 0.78 times more return on investment than USCF ETF. However, First Trust Global is 1.28 times less risky than USCF ETF. It trades about 0.2 of its potential returns per unit of risk. USCF ETF Trust is currently generating about 0.05 per unit of risk. If you would invest  2,359  in First Trust Global on December 27, 2024 and sell it today you would earn a total of  184.00  from holding First Trust Global or generate 7.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

First Trust Global  vs.  USCF ETF Trust

First Trust Global

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Global are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, First Trust may actually be approaching a critical reversion point that can send shares even higher in April 2025.

USCF ETF Trust

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in USCF ETF Trust are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, USCF ETF is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with First Trust and USCF ETF

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

The idea behind First Trust Global and USCF ETF Trust 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.

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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.