Correlation Between First Trust and Invesco Solar
Can any of the company-specific risk be diversified away by investing in both First Trust and Invesco Solar 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 Solar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Water and Invesco Solar ETF, you can compare the effects of market volatilities on First Trust and Invesco Solar 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 Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Invesco Solar.
Diversification Opportunities for First Trust and Invesco Solar
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between First and Invesco is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Water and Invesco Solar ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Solar ETF 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 Water are associated (or correlated) with Invesco Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Solar ETF has no effect on the direction of First Trust i.e., First Trust and Invesco Solar go up and down completely randomly.
Pair Corralation between First Trust and Invesco Solar
Considering the 90-day investment horizon First Trust Water is expected to generate 0.4 times more return on investment than Invesco Solar. However, First Trust Water is 2.5 times less risky than Invesco Solar. It trades about 0.09 of its potential returns per unit of risk. Invesco Solar ETF is currently generating about -0.09 per unit of risk. If you would invest 8,113 in First Trust Water on January 19, 2024 and sell it today you would earn a total of 1,618 from holding First Trust Water or generate 19.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Water vs. Invesco Solar ETF
Performance |
| Timeline |
| First Trust Water |
| Invesco Solar ETF |
First Trust and Invesco Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Invesco Solar
The main advantage of trading using opposite First Trust and Invesco Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Invesco Solar 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 Solar will offset losses from the drop in Invesco Solar's long position.| First Trust vs. iShares Global Industrials | First Trust vs. iShares Global Utilities | First Trust vs. iShares Global Consumer | First Trust vs. iShares Global Consumer |
| Invesco Solar vs. Invesco Global Listed | Invesco Solar vs. VanEck BDC Income | Invesco Solar vs. ProShares DJ Brookfield | Invesco Solar vs. HUMANA INC |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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