Correlation Between First Trust and Change Finance
Can any of the company-specific risk be diversified away by investing in both First Trust and Change Finance 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 Change Finance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust EIP and Change Finance Diversified, you can compare the effects of market volatilities on First Trust and Change Finance 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 Change Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Change Finance.
Diversification Opportunities for First Trust and Change Finance
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Change is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding First Trust EIP and Change Finance Diversified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Change Finance Diver 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 EIP are associated (or correlated) with Change Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Change Finance Diver has no effect on the direction of First Trust i.e., First Trust and Change Finance go up and down completely randomly.
Pair Corralation between First Trust and Change Finance
Given the investment horizon of 90 days First Trust is expected to generate 4.5 times less return on investment than Change Finance. But when comparing it to its historical volatility, First Trust EIP is 1.23 times less risky than Change Finance. It trades about 0.03 of its potential returns per unit of risk. Change Finance Diversified is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,603 in Change Finance Diversified on July 14, 2025 and sell it today you would earn a total of 123.00 from holding Change Finance Diversified or generate 4.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 61.54% |
| Values | Daily Returns |
First Trust EIP vs. Change Finance Diversified
Performance |
| Timeline |
| First Trust EIP |
Risk-Adjusted Performance
Weak
Weak | Strong |
| Change Finance Diver |
First Trust and Change Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Change Finance
The main advantage of trading using opposite First Trust and Change Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Change Finance 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 Change Finance will offset losses from the drop in Change Finance's long position.| First Trust vs. Change Finance Diversified | First Trust vs. Amplify Etho Climate | First Trust vs. Virtus Reaves Utilities | First Trust vs. First Trust Utilities |
| Change Finance vs. Amplify Etho Climate | Change Finance vs. iShares MSCI ACWI | Change Finance vs. SPDR SP 500 | Change Finance vs. Northern Lights |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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