Correlation Between First Trust and Direxion NASDAQ
Can any of the company-specific risk be diversified away by investing in both First Trust and Direxion NASDAQ 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 Direxion NASDAQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust NASDAQ 100 and Direxion NASDAQ 100 Equal, you can compare the effects of market volatilities on First Trust and Direxion NASDAQ 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 Direxion NASDAQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Direxion NASDAQ.
Diversification Opportunities for First Trust and Direxion NASDAQ
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and Direxion is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding First Trust NASDAQ 100 and Direxion NASDAQ 100 Equal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion NASDAQ 100 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 NASDAQ 100 are associated (or correlated) with Direxion NASDAQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direxion NASDAQ 100 has no effect on the direction of First Trust i.e., First Trust and Direxion NASDAQ go up and down completely randomly.
Pair Corralation between First Trust and Direxion NASDAQ
Given the investment horizon of 90 days First Trust NASDAQ 100 is expected to generate 0.74 times more return on investment than Direxion NASDAQ. However, First Trust NASDAQ 100 is 1.35 times less risky than Direxion NASDAQ. It trades about -0.01 of its potential returns per unit of risk. Direxion NASDAQ 100 Equal is currently generating about -0.04 per unit of risk. If you would invest 9,857 in First Trust NASDAQ 100 on December 2, 2024 and sell it today you would lose (47.00) from holding First Trust NASDAQ 100 or give up 0.48% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
First Trust NASDAQ 100 vs. Direxion NASDAQ 100 Equal
Performance |
Timeline |
First Trust NASDAQ |
Direxion NASDAQ 100 |
First Trust and Direxion NASDAQ Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with First Trust and Direxion NASDAQ
The main advantage of trading using opposite First Trust and Direxion NASDAQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Direxion NASDAQ 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 Direxion NASDAQ will offset losses from the drop in Direxion NASDAQ's long position.First Trust vs. First Trust NASDAQ 100 | First Trust vs. First Trust Multi | First Trust vs. First Trust Large | First Trust vs. First Trust Large |
Direxion NASDAQ vs. First Trust NASDAQ 100 | Direxion NASDAQ vs. First Trust NASDAQ 100 | Direxion NASDAQ vs. Invesco SP 500 | Direxion NASDAQ vs. Invesco SP 500 |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
Transaction History View history of all your transactions and understand their impact on performance |