Correlation Between Strategy Shares and First Trust
Can any of the company-specific risk be diversified away by investing in both Strategy Shares 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 Strategy Shares and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Strategy Shares and First Trust International, you can compare the effects of market volatilities on Strategy Shares 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 Strategy Shares with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strategy Shares and First Trust.
Diversification Opportunities for Strategy Shares and First Trust
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Strategy and First is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Strategy Shares and First Trust International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust International and Strategy Shares 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 Strategy Shares 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 International has no effect on the direction of Strategy Shares i.e., Strategy Shares and First Trust go up and down completely randomly.
Pair Corralation between Strategy Shares and First Trust
Given the investment horizon of 90 days Strategy Shares is expected to generate 0.56 times more return on investment than First Trust. However, Strategy Shares is 1.77 times less risky than First Trust. It trades about 0.18 of its potential returns per unit of risk. First Trust International is currently generating about 0.09 per unit of risk. If you would invest 2,428 in Strategy Shares on April 28, 2025 and sell it today you would earn a total of 119.00 from holding Strategy Shares or generate 4.9% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Strategy Shares vs. First Trust International
Performance |
Timeline |
Strategy Shares |
First Trust International |
Strategy Shares and First Trust Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Strategy Shares and First Trust
The main advantage of trading using opposite Strategy Shares and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strategy Shares 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.Strategy Shares vs. Freedom Day Dividend | Strategy Shares vs. Davis Select International | Strategy Shares vs. iShares MSCI China | Strategy Shares vs. SmartETFs Dividend Builder |
First Trust vs. Strategy Shares | First Trust vs. Freedom Day Dividend | First Trust vs. Davis Select International | First Trust vs. iShares MSCI China |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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