Correlation Between First Trust and FolioBeyond Rising

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

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

Diversification Opportunities for First Trust and FolioBeyond Rising

-0.75

Correlation Coefficient

First Trust  FolioBeyond Rising

Pay attention - limited upside

The 3 months correlation between First and FolioBeyond is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding First Trust TCW and FolioBeyond Rising Rates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FolioBeyond Rising Rates 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 TCW are associated (or correlated) with FolioBeyond Rising. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FolioBeyond Rising Rates has no effect on the direction of First Trust i.e., First Trust and FolioBeyond Rising go up and down completely randomly.

Pair Corralation between First Trust and FolioBeyond Rising

Given the investment horizon of 90 days First Trust TCW is expected to under-perform the FolioBeyond Rising. But the etf apears to be less risky and, when comparing its historical volatility, First Trust TCW is 3.5 times less risky than FolioBeyond Rising. The etf trades about -0.01 of its potential returns per unit of risk. The FolioBeyond Rising Rates is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  3,325  in FolioBeyond Rising Rates on September 13, 2024 and sell it today you would earn a total of  243.00  from holding FolioBeyond Rising Rates or generate 7.31% return on investment over 90 days.

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

First Trust TCW  vs.  FolioBeyond Rising Rates

First Trust TCW

Risk-Adjusted Performance

0 of 100

Very Weak

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

FolioBeyond Rising Rates

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FolioBeyond Rising Rates are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, FolioBeyond Rising may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with First Trust and FolioBeyond Rising

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

The idea behind First Trust TCW and FolioBeyond Rising Rates 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.