Correlation Between First Trust and SPDR Barclays
Can any of the company-specific risk be diversified away by investing in both First Trust and SPDR Barclays 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 SPDR Barclays into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Senior and SPDR Barclays Intermediate, you can compare the effects of market volatilities on First Trust and SPDR Barclays 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 SPDR Barclays. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and SPDR Barclays.
Diversification Opportunities for First Trust and SPDR Barclays
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and SPDR is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Senior and SPDR Barclays Intermediate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Barclays Interm 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 Senior are associated (or correlated) with SPDR Barclays. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Barclays Interm has no effect on the direction of First Trust i.e., First Trust and SPDR Barclays go up and down completely randomly.
Pair Corralation between First Trust and SPDR Barclays
Given the investment horizon of 90 days First Trust Senior is expected to generate 0.78 times more return on investment than SPDR Barclays. However, First Trust Senior is 1.28 times less risky than SPDR Barclays. It trades about 0.09 of its potential returns per unit of risk. SPDR Barclays Intermediate is currently generating about 0.03 per unit of risk. If you would invest 4,069 in First Trust Senior on January 25, 2024 and sell it today you would earn a total of 535.00 from holding First Trust Senior or generate 13.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Senior vs. SPDR Barclays Intermediate
Performance |
| Timeline |
| First Trust Senior |
| SPDR Barclays Interm |
First Trust and SPDR Barclays Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and SPDR Barclays
The main advantage of trading using opposite First Trust and SPDR Barclays positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, SPDR Barclays 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 SPDR Barclays will offset losses from the drop in SPDR Barclays' long position.| First Trust vs. First Trust Tactical | First Trust vs. Invesco Variable Rate | First Trust vs. WisdomTree Interest Rate |
| SPDR Barclays vs. iShares iBonds 2026 | SPDR Barclays vs. iShares iBonds Dec | SPDR Barclays vs. iShares 25 Year |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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