Correlation Between Formidable ETF and First Trust
Can any of the company-specific risk be diversified away by investing in both Formidable ETF 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 Formidable ETF and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Formidable ETF and First Trust Indxx, you can compare the effects of market volatilities on Formidable ETF 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 Formidable ETF with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Formidable ETF and First Trust.
Diversification Opportunities for Formidable ETF and First Trust
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Formidable and First is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Formidable ETF and First Trust Indxx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Indxx and Formidable ETF 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 Formidable ETF 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 Indxx has no effect on the direction of Formidable ETF i.e., Formidable ETF and First Trust go up and down completely randomly.
Pair Corralation between Formidable ETF and First Trust
Given the investment horizon of 90 days Formidable ETF is expected to generate 0.89 times more return on investment than First Trust. However, Formidable ETF is 1.12 times less risky than First Trust. It trades about 0.28 of its potential returns per unit of risk. First Trust Indxx is currently generating about 0.23 per unit of risk. If you would invest 2,098 in Formidable ETF on April 28, 2025 and sell it today you would earn a total of 279.00 from holding Formidable ETF or generate 13.3% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Formidable ETF vs. First Trust Indxx
Performance |
Timeline |
Formidable ETF |
First Trust Indxx |
Formidable ETF and First Trust Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Formidable ETF and First Trust
The main advantage of trading using opposite Formidable ETF and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Formidable ETF 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.Formidable ETF vs. Franklin Liberty Systematic | Formidable ETF vs. First Trust Managed | Formidable ETF vs. Alger Mid Cap | Formidable ETF vs. Tidal ETF Trust |
First Trust vs. First Trust Indxx | First Trust vs. First Trust Nasdaq | First Trust vs. First Trust Nasdaq | First Trust vs. First Trust Latin |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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