Correlation Between First Trust and DoubleLine ETF

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

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

Diversification Opportunities for First Trust and DoubleLine ETF

0.92

Correlation Coefficient

First Trust  DoubleLine ETF

Almost no diversification

The 3 months correlation between First and DoubleLine is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Dorsey and DoubleLine ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DoubleLine ETF Trust 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 Dorsey are associated (or correlated) with DoubleLine ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DoubleLine ETF Trust has no effect on the direction of First Trust i.e., First Trust and DoubleLine ETF go up and down completely randomly.

Pair Corralation between First Trust and DoubleLine ETF

Allowing for the 90-day total investment horizon First Trust Dorsey is expected to generate 4.64 times more return on investment than DoubleLine ETF. However, First Trust is 4.64 times more volatile than DoubleLine ETF Trust. It trades about 0.14 of its potential returns per unit of risk. DoubleLine ETF Trust is currently generating about 0.29 per unit of risk. If you would invest  5,785  in First Trust Dorsey on June 11, 2025 and sell it today you would earn a total of  357.00  from holding First Trust Dorsey or generate 6.17% return on investment over 90 days.

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

First Trust Dorsey  vs.  DoubleLine ETF Trust

First Trust Dorsey

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Dorsey are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, First Trust may actually be approaching a critical reversion point that can send shares even higher in October 2025.

DoubleLine ETF Trust

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in DoubleLine ETF Trust are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong primary indicators, DoubleLine ETF is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with First Trust and DoubleLine ETF

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

The idea behind First Trust Dorsey and DoubleLine ETF Trust 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.