Correlation Between YieldMax MSTR and First Trust

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

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

Diversification Opportunities for YieldMax MSTR and First Trust

0.69

Correlation Coefficient

YieldMax MSTR  First Trust

Poor diversification

The 3 months correlation between YieldMax and First is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding YieldMax MSTR Option and First Trust Exchange Traded in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Exchange and YieldMax MSTR 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 YieldMax MSTR Option 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 Exchange has no effect on the direction of YieldMax MSTR i.e., YieldMax MSTR and First Trust go up and down completely randomly.

Pair Corralation between YieldMax MSTR and First Trust

Given the investment horizon of 90 days YieldMax MSTR is expected to generate 1.6 times less return on investment than First Trust. In addition to that, YieldMax MSTR is 4.49 times more volatile than First Trust Exchange Traded. It trades about 0.04 of its total potential returns per unit of risk. First Trust Exchange Traded is currently generating about 0.29 per unit of volatility. If you would invest  4,339  in First Trust Exchange Traded on May 1, 2025 and sell it today you would earn a total of  415.00  from holding First Trust Exchange Traded or generate 9.56% return on investment over 90 days.

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

YieldMax MSTR Option  vs.  First Trust Exchange Traded

YieldMax MSTR Option

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in YieldMax MSTR Option are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, YieldMax MSTR is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

First Trust Exchange

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Exchange Traded are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, First Trust may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with YieldMax MSTR and First Trust

The main advantage of trading using opposite YieldMax MSTR and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YieldMax MSTR 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 YieldMax MSTR Option and First Trust Exchange Traded 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.