Correlation Between First Trust and Macquarie ETF

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

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

Diversification Opportunities for First Trust and Macquarie ETF

0.39

Correlation Coefficient

First Trust  Macquarie ETF

Weak diversification

The 3 months correlation between First and Macquarie is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Flexible and Macquarie ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquarie 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 Flexible are associated (or correlated) with Macquarie ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macquarie ETF Trust has no effect on the direction of First Trust i.e., First Trust and Macquarie ETF go up and down completely randomly.

Pair Corralation between First Trust and Macquarie ETF

Given the investment horizon of 90 days First Trust Flexible is expected to under-perform the Macquarie ETF. In addition to that, First Trust is 5.1 times more volatile than Macquarie ETF Trust. It trades about -0.03 of its total potential returns per unit of risk. Macquarie ETF Trust is currently generating about 0.09 per unit of volatility. If you would invest  2,516  in Macquarie ETF Trust on October 22, 2024 and sell it today you would earn a total of  13.00  from holding Macquarie ETF Trust or generate 0.52% return on investment over 90 days.

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

First Trust Flexible  vs.  Macquarie ETF Trust

First Trust Flexible

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Trust Flexible has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, First Trust is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Macquarie ETF Trust

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with First Trust and Macquarie ETF

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

The idea behind First Trust Flexible and Macquarie 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.