Correlation Between First Trust and SPDR MSCI

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

By analyzing existing cross correlation between First Trust LongShort and SPDR MSCI ACWI, you can compare the effects of market volatilities on First Trust and SPDR MSCI 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 SPDR MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and SPDR MSCI.

Diversification Opportunities for First Trust and SPDR MSCI

0.71

Correlation Coefficient

First Trust  SPDR MSCI

Poor diversification

The 3 months correlation between First and SPDR is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding First Trust LongShort and SPDR MSCI ACWI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR MSCI ACWI 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 LongShort are associated (or correlated) with SPDR MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR MSCI ACWI has no effect on the direction of First Trust i.e., First Trust and SPDR MSCI go up and down completely randomly.

Pair Corralation between First Trust and SPDR MSCI

Given the investment horizon of 90 days First Trust is expected to generate 1.84 times less return on investment than SPDR MSCI. But when comparing it to its historical volatility, First Trust LongShort is 1.25 times less risky than SPDR MSCI. It trades about 0.08 of its potential returns per unit of risk. SPDR MSCI ACWI is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  3,410  in SPDR MSCI ACWI on September 29, 2025 and sell it today you would earn a total of  201.00  from holding SPDR MSCI ACWI or generate 5.89% return on investment over 90 days.

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

First Trust LongShort  vs.  SPDR MSCI ACWI

First Trust LongShort

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust LongShort are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, First Trust is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

SPDR MSCI ACWI

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR MSCI ACWI are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, SPDR MSCI is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with First Trust and SPDR MSCI

The main advantage of trading using opposite First Trust and SPDR MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, SPDR MSCI 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 SPDR MSCI will offset losses from the drop in SPDR MSCI's long position.

The idea behind First Trust LongShort and SPDR MSCI ACWI 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.