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 IndustrialsProducer 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

0.93

Correlation Coefficient

First Trust  SPDR MSCI

Almost no diversification

The 3 months correlation between First and SPDR is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding First Trust IndustrialsProduce 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 IndustrialsProducer 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

Considering the 90-day investment horizon First Trust IndustrialsProducer is expected to generate 1.78 times more return on investment than SPDR MSCI. However, First Trust is 1.78 times more volatile than SPDR MSCI ACWI. It trades about 0.18 of its potential returns per unit of risk. SPDR MSCI ACWI is currently generating about 0.17 per unit of risk. If you would invest  6,878  in First Trust IndustrialsProducer on May 2, 2025 and sell it today you would earn a total of  894.00  from holding First Trust IndustrialsProducer or generate 13.0% 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 IndustrialsProduce  vs.  SPDR MSCI ACWI

First Trust Industri

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust IndustrialsProducer are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, First Trust reported solid returns over the last few months and may actually be approaching a breakup point.

SPDR MSCI ACWI

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR MSCI ACWI are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, SPDR MSCI may actually be approaching a critical reversion point that can send shares even higher in August 2025.

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 IndustrialsProducer 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.