Correlation Between T Rex and First Trust

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

By analyzing existing cross correlation between T Rex 2X Long and First Trust TCW, you can compare the effects of market volatilities on T Rex and First Trust 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 T Rex with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of T Rex and First Trust.

Diversification Opportunities for T Rex and First Trust

-0.83

Correlation Coefficient

T Rex  First Trust

Pay attention - limited upside

The 3 months correlation between NVDX and First is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding T Rex 2X Long and First Trust TCW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust TCW and T Rex 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 T Rex 2X Long are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust TCW has no effect on the direction of T Rex i.e., T Rex and First Trust go up and down completely randomly.

Pair Corralation between T Rex and First Trust

Given the investment horizon of 90 days T Rex 2X Long is expected to under-perform the First Trust. In addition to that, T Rex is 24.83 times more volatile than First Trust TCW. It trades about -0.06 of its total potential returns per unit of risk. First Trust TCW is currently generating about 0.13 per unit of volatility. If you would invest  4,253  in First Trust TCW on December 27, 2024 and sell it today you would earn a total of  114.00  from holding First Trust TCW or generate 2.68% return on investment over 90 days.

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

T Rex 2X Long  vs.  First Trust TCW

T Rex 2X

Risk-Adjusted Performance

Very Weak

Over the last 90 days T Rex 2X Long has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

First Trust TCW

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust TCW are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, First Trust is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with T Rex and First Trust

The main advantage of trading using opposite T Rex and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T Rex position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.

The idea behind T Rex 2X Long and First Trust TCW 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 CEOs Directory module to screen CEOs from public companies around the world.