Correlation Between Ultrashort Mid and First Trust

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

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

Diversification Opportunities for Ultrashort Mid and First Trust

-0.93

Correlation Coefficient

Ultrashort Mid  First Trust

Pay attention - limited upside

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

Pair Corralation between Ultrashort Mid and First Trust

Assuming the 90 days horizon Ultrashort Mid Cap Profund is expected to under-perform the First Trust. In addition to that, Ultrashort Mid is 14.46 times more volatile than First Trust Multi Strategy. It trades about -0.18 of its total potential returns per unit of risk. First Trust Multi Strategy is currently generating about 0.34 per unit of volatility. If you would invest  2,379  in First Trust Multi Strategy on April 30, 2025 and sell it today you would earn a total of  69.00  from holding First Trust Multi Strategy or generate 2.9% return on investment over 90 days.

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

Ultrashort Mid Cap Profund  vs.  First Trust Multi Strategy

Ultrashort Mid Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ultrashort Mid Cap Profund has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's forward indicators remain fairly strong which may send shares a bit higher in August 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

First Trust Multi

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Multi Strategy are ranked lower than 26 (%) of all funds and portfolios of funds over the last 90 days. 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 Ultrashort Mid and First Trust

The main advantage of trading using opposite Ultrashort Mid and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ultrashort Mid 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 Ultrashort Mid Cap Profund and First Trust Multi Strategy 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..