Correlation Between AdvisorShares Dorsey and First Trust

Can any of the company-specific risk be diversified away by investing in both AdvisorShares Dorsey 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 AdvisorShares Dorsey and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AdvisorShares Dorsey Wright and First Trust Active, you can compare the effects of market volatilities on AdvisorShares Dorsey 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 AdvisorShares Dorsey with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of AdvisorShares Dorsey and First Trust.

Diversification Opportunities for AdvisorShares Dorsey and First Trust

0.58

Correlation Coefficient

AdvisorShares Dorsey  First Trust

Very weak diversification

The 3 months correlation between AdvisorShares and First is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding AdvisorShares Dorsey Wright and First Trust Active in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Active and AdvisorShares Dorsey 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 AdvisorShares Dorsey Wright 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 Active has no effect on the direction of AdvisorShares Dorsey i.e., AdvisorShares Dorsey and First Trust go up and down completely randomly.

Pair Corralation between AdvisorShares Dorsey and First Trust

Given the investment horizon of 90 days AdvisorShares Dorsey Wright is expected to generate 1.05 times more return on investment than First Trust. However, AdvisorShares Dorsey is 1.05 times more volatile than First Trust Active. It trades about 0.05 of its potential returns per unit of risk. First Trust Active is currently generating about 0.03 per unit of risk. If you would invest  8,114  in AdvisorShares Dorsey Wright on August 19, 2025 and sell it today you would earn a total of  279.00  from holding AdvisorShares Dorsey Wright or generate 3.44% return on investment over 90 days.

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

AdvisorShares Dorsey Wright  vs.  First Trust Active

AdvisorShares Dorsey

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in AdvisorShares Dorsey Wright are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, AdvisorShares Dorsey is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

First Trust Active

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Active are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, First Trust is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with AdvisorShares Dorsey and First Trust

The main advantage of trading using opposite AdvisorShares Dorsey and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AdvisorShares Dorsey 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.

The idea behind AdvisorShares Dorsey Wright and First Trust Active 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.