Correlation Between SPDR Blackstone and First Trust

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Can any of the company-specific risk be diversified away by investing in both SPDR Blackstone 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 SPDR Blackstone and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Blackstone Senior and First Trust LongShort, you can compare the effects of market volatilities on SPDR Blackstone 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 SPDR Blackstone with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Blackstone and First Trust.

Diversification Opportunities for SPDR Blackstone and First Trust

0.94
  Correlation Coefficient

Almost no diversification

The 3 months correlation between SPDR and First is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Blackstone Senior and First Trust LongShort in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust LongShort and SPDR Blackstone 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 SPDR Blackstone Senior 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 LongShort has no effect on the direction of SPDR Blackstone i.e., SPDR Blackstone and First Trust go up and down completely randomly.

Pair Corralation between SPDR Blackstone and First Trust

Given the investment horizon of 90 days SPDR Blackstone is expected to generate 1.5 times less return on investment than First Trust. But when comparing it to its historical volatility, SPDR Blackstone Senior is 3.29 times less risky than First Trust. It trades about 0.48 of its potential returns per unit of risk. First Trust LongShort is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  6,277  in First Trust LongShort on April 24, 2025 and sell it today you would earn a total of  372.00  from holding First Trust LongShort or generate 5.93% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

SPDR Blackstone Senior  vs.  First Trust LongShort

 Performance 
       Timeline  
SPDR Blackstone Senior 

Risk-Adjusted Performance

Very Strong

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Blackstone Senior are ranked lower than 38 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy essential indicators, SPDR Blackstone is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.
First Trust LongShort 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in First Trust LongShort are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, First Trust is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

SPDR Blackstone and First Trust Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SPDR Blackstone and First Trust

The main advantage of trading using opposite SPDR Blackstone and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Blackstone 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 SPDR Blackstone Senior and First Trust LongShort 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 Stocks Directory module to find actively traded stocks across global markets.

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