Correlation Between First Trust and Ero Copper
Can any of the company-specific risk be diversified away by investing in both First Trust and Ero Copper 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 Ero Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Exchange Traded and Ero Copper Corp, you can compare the effects of market volatilities on First Trust and Ero Copper 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 Ero Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Ero Copper.
Diversification Opportunities for First Trust and Ero Copper
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between First and Ero is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Exchange Traded and Ero Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ero Copper Corp 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 Exchange Traded are associated (or correlated) with Ero Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ero Copper Corp has no effect on the direction of First Trust i.e., First Trust and Ero Copper go up and down completely randomly.
Pair Corralation between First Trust and Ero Copper
Given the investment horizon of 90 days First Trust is expected to generate 1.67 times less return on investment than Ero Copper. But when comparing it to its historical volatility, First Trust Exchange Traded is 17.37 times less risky than Ero Copper. It trades about 0.36 of its potential returns per unit of risk. Ero Copper Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,351 in Ero Copper Corp on December 25, 2024 and sell it today you would earn a total of 48.00 from holding Ero Copper Corp or generate 3.55% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 91.67% |
Values | Daily Returns |
First Trust Exchange Traded vs. Ero Copper Corp
Performance |
Timeline |
First Trust Exchange |
Ero Copper Corp |
First Trust and Ero Copper Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with First Trust and Ero Copper
The main advantage of trading using opposite First Trust and Ero Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Ero Copper 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 Ero Copper will offset losses from the drop in Ero Copper's long position.First Trust vs. Valued Advisers Trust | First Trust vs. Columbia Diversified Fixed | First Trust vs. Principal Exchange Traded Funds | First Trust vs. MFS Active Core |
Ero Copper vs. Freeport McMoran Copper Gold | Ero Copper vs. Amerigo Resources | Ero Copper vs. Hudbay Minerals | Ero Copper vs. Capstone Copper Corp |
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.
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