Correlation Between Series Portfolios and First Trust

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

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

Diversification Opportunities for Series Portfolios and First Trust

0.77

Correlation Coefficient

Series Portfolios  First Trust

Poor diversification

The 3 months correlation between Series and First is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Series Portfolios Trust and First Trust Dorsey in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Dorsey and Series Portfolios 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 Series Portfolios Trust 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 Dorsey has no effect on the direction of Series Portfolios i.e., Series Portfolios and First Trust go up and down completely randomly.

Pair Corralation between Series Portfolios and First Trust

Given the investment horizon of 90 days Series Portfolios Trust is expected to generate 4.42 times more return on investment than First Trust. However, Series Portfolios is 4.42 times more volatile than First Trust Dorsey. It trades about 0.2 of its potential returns per unit of risk. First Trust Dorsey is currently generating about 0.24 per unit of risk. If you would invest  3,451  in Series Portfolios Trust on May 3, 2025 and sell it today you would earn a total of  483.00  from holding Series Portfolios Trust or generate 14.0% return on investment over 90 days.

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

Series Portfolios Trust  vs.  First Trust Dorsey

Series Portfolios Trust

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Series Portfolios Trust are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Series Portfolios showed solid returns over the last few months and may actually be approaching a breakup point.

First Trust Dorsey

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Dorsey are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, First Trust is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Series Portfolios and First Trust

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

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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.