Correlation Between Tax Managed and First Trust

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

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

Diversification Opportunities for Tax Managed and First Trust

0.0

Correlation Coefficient

Tax Managed  First Trust

Pay attention - limited upside

The 3 months correlation between Tax and First is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Tax Managed International Equi and First Trust Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Short and Tax Managed 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 Tax Managed International Equity 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 Short has no effect on the direction of Tax Managed i.e., Tax Managed and First Trust go up and down completely randomly.

Pair Corralation between Tax Managed and First Trust

If you would invest  1,226  in Tax Managed International Equity on May 1, 2025 and sell it today you would earn a total of  107.00  from holding Tax Managed International Equity or generate 8.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Tax Managed International Equi  vs.  First Trust Short

Tax Managed Internat

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tax Managed International Equity are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Tax Managed may actually be approaching a critical reversion point that can send shares even higher in August 2025.

First Trust Short

Risk-Adjusted Performance

Solid

Over the last 90 days First Trust Short has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, First Trust is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Tax Managed and First Trust

The main advantage of trading using opposite Tax Managed and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tax Managed 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 Tax Managed International Equity and First Trust Short 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.