Correlation Between SPDR Barclays and First Trust
Can any of the company-specific risk be diversified away by investing in both SPDR Barclays and First Trust 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 SPDR Barclays and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Barclays Intermediate and First Trust Senior, you can compare the effects of market volatilities on SPDR Barclays and First Trust 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 SPDR Barclays with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Barclays and First Trust.
Diversification Opportunities for SPDR Barclays and First Trust
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between SPDR and First is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Barclays Intermediate and First Trust Senior in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Senior and SPDR Barclays 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 SPDR Barclays Intermediate are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Senior has no effect on the direction of SPDR Barclays i.e., SPDR Barclays and First Trust go up and down completely randomly.
Pair Corralation between SPDR Barclays and First Trust
Given the investment horizon of 90 days SPDR Barclays is expected to generate 8.74 times less return on investment than First Trust. In addition to that, SPDR Barclays is 2.08 times more volatile than First Trust Senior. It trades about 0.02 of its total potential returns per unit of risk. First Trust Senior is currently generating about 0.31 per unit of volatility. If you would invest 4,517 in First Trust Senior on February 12, 2024 and sell it today you would earn a total of 107.00 from holding First Trust Senior or generate 2.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR Barclays Intermediate vs. First Trust Senior
Performance |
| Timeline |
| SPDR Barclays Interm |
| First Trust Senior |
SPDR Barclays and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Barclays and First Trust
The main advantage of trading using opposite SPDR Barclays and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Barclays position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| SPDR Barclays vs. iShares iBonds 2026 | SPDR Barclays vs. iShares iBonds Dec | SPDR Barclays vs. iShares 25 Year |
| First Trust vs. First Trust Tactical | First Trust vs. First Trust Low | First Trust vs. First Trust Enhanced | First Trust vs. First Trust Managed |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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