Correlation Between First Trust and ProShares Trust

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

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

Diversification Opportunities for First Trust and ProShares Trust

-0.38

Correlation Coefficient

First Trust  ProShares Trust

Very good diversification

The 3 months correlation between First and ProShares is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Multi Manager and ProShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares 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 Multi Manager are associated (or correlated) with ProShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Trust has no effect on the direction of First Trust i.e., First Trust and ProShares Trust go up and down completely randomly.

Pair Corralation between First Trust and ProShares Trust

Given the investment horizon of 90 days First Trust Multi Manager is expected to generate 3.88 times more return on investment than ProShares Trust. However, First Trust is 3.88 times more volatile than ProShares Trust . It trades about 0.21 of its potential returns per unit of risk. ProShares Trust is currently generating about 0.24 per unit of risk. If you would invest  1,837  in First Trust Multi Manager on April 30, 2025 and sell it today you would earn a total of  260.00  from holding First Trust Multi Manager or generate 14.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	37.1%
Values	Daily Returns

First Trust Multi Manager  vs.  ProShares Trust

First Trust Multi

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Multi Manager are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, First Trust exhibited solid returns over the last few months and may actually be approaching a breakup point.

ProShares Trust

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Trust are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, ProShares Trust is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with First Trust and ProShares Trust

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

The idea behind First Trust Multi Manager and ProShares 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.

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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 Commodity Directory module to find actively traded commodities issued by global exchanges.