Correlation Between Elevation Series and First Trust

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

By analyzing existing cross correlation between Elevation Series Trust and First Trust Emerging, you can compare the effects of market volatilities on Elevation Series 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 Elevation Series with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elevation Series and First Trust.

Diversification Opportunities for Elevation Series and First Trust

0.93

Correlation Coefficient

Elevation Series  First Trust

Almost no diversification

The 3 months correlation between Elevation and First is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Elevation Series Trust and First Trust Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Emerging and Elevation Series 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 Elevation Series Trust 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 Emerging has no effect on the direction of Elevation Series i.e., Elevation Series and First Trust go up and down completely randomly.

Pair Corralation between Elevation Series and First Trust

Given the investment horizon of 90 days Elevation Series Trust is expected to generate 2.73 times more return on investment than First Trust. However, Elevation Series is 2.73 times more volatile than First Trust Emerging. It trades about 0.35 of its potential returns per unit of risk. First Trust Emerging is currently generating about 0.23 per unit of risk. If you would invest  3,303  in Elevation Series Trust on April 22, 2025 and sell it today you would earn a total of  1,151  from holding Elevation Series Trust or generate 34.84% return on investment over 90 days.

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

Elevation Series Trust  vs.  First Trust Emerging

Elevation Series Trust

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Elevation Series Trust are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Elevation Series showed solid returns over the last few months and may actually be approaching a breakup point.

First Trust Emerging

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Emerging are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain primary indicators, First Trust may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Elevation Series and First Trust

The main advantage of trading using opposite Elevation Series and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elevation Series 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.

The idea behind Elevation Series Trust and First Trust Emerging 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.