Correlation Between First Trust and ETF Opportunities

Can any of the company-specific risk be diversified away by investing in both First Trust and ETF Opportunities 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 ETF Opportunities 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 ETF Opportunities Trust, you can compare the effects of market volatilities on First Trust and ETF Opportunities 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 ETF Opportunities. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and ETF Opportunities.

Diversification Opportunities for First Trust and ETF Opportunities

-0.59

Correlation Coefficient

First Trust  ETF Opportunities

Excellent diversification

The 3 months correlation between First and ETF is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Exchange Traded and ETF Opportunities Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETF Opportunities 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 Exchange Traded are associated (or correlated) with ETF Opportunities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETF Opportunities Trust has no effect on the direction of First Trust i.e., First Trust and ETF Opportunities go up and down completely randomly.

Pair Corralation between First Trust and ETF Opportunities

Given the investment horizon of 90 days First Trust Exchange Traded is expected to generate 0.47 times more return on investment than ETF Opportunities. However, First Trust Exchange Traded is 2.14 times less risky than ETF Opportunities. It trades about -0.21 of its potential returns per unit of risk. ETF Opportunities Trust is currently generating about -0.1 per unit of risk. If you would invest  2,323  in First Trust Exchange Traded on October 3, 2024 and sell it today you would lose (40.00) from holding First Trust Exchange Traded or give up 1.72% of portfolio value over 90 days.

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

First Trust Exchange Traded  vs.  ETF Opportunities Trust

First Trust Exchange

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Trust Exchange Traded has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, First Trust is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

ETF Opportunities Trust

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ETF Opportunities Trust are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, ETF Opportunities is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with First Trust and ETF Opportunities

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

The idea behind First Trust Exchange Traded and ETF Opportunities 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.