Correlation Between First Trust and Invesco
Can any of the company-specific risk be diversified away by investing in both First Trust and Invesco 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 Invesco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Mid and Invesco, you can compare the effects of market volatilities on First Trust and Invesco 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 Invesco. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Invesco.
Diversification Opportunities for First Trust and Invesco
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between First and Invesco is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Mid and Invesco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco 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 Mid are associated (or correlated) with Invesco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco has no effect on the direction of First Trust i.e., First Trust and Invesco go up and down completely randomly.
Pair Corralation between First Trust and Invesco
Considering the 90-day investment horizon First Trust Mid is expected to generate 1.57 times more return on investment than Invesco. However, First Trust is 1.57 times more volatile than Invesco. It trades about 0.09 of its potential returns per unit of risk. Invesco is currently generating about 0.03 per unit of risk. If you would invest 8,761 in First Trust Mid on January 25, 2024 and sell it today you would earn a total of 2,036 from holding First Trust Mid or generate 23.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 41.23% |
| Values | Daily Returns |
First Trust Mid vs. Invesco
Performance |
| Timeline |
| First Trust Mid |
| Invesco |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
First Trust and Invesco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Invesco
The main advantage of trading using opposite First Trust and Invesco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Invesco 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 Invesco will offset losses from the drop in Invesco's long position.| First Trust vs. SPDR Russell 1000 | First Trust vs. SPDR MSCI USA | First Trust vs. SPDR MSCI EAFE | First Trust vs. SPDR SSGA Large |
| Invesco vs. Invesco Dynamic Large | Invesco vs. Invesco Dynamic Large | Invesco vs. Perella Weinberg Partners |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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