Correlation Between First Trust and Barclays ETN
Can any of the company-specific risk be diversified away by investing in both First Trust and Barclays ETN 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 Barclays ETN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust North and Barclays ETN Select, you can compare the effects of market volatilities on First Trust and Barclays ETN 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 Barclays ETN. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Barclays ETN.
Diversification Opportunities for First Trust and Barclays ETN
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Barclays is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding First Trust North and Barclays ETN Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barclays ETN Select 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 North are associated (or correlated) with Barclays ETN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barclays ETN Select has no effect on the direction of First Trust i.e., First Trust and Barclays ETN go up and down completely randomly.
Pair Corralation between First Trust and Barclays ETN
Given the investment horizon of 90 days First Trust North is expected to generate 0.74 times more return on investment than Barclays ETN. However, First Trust North is 1.34 times less risky than Barclays ETN. It trades about 0.01 of its potential returns per unit of risk. Barclays ETN Select is currently generating about -0.02 per unit of risk. If you would invest 3,719 in First Trust North on March 30, 2025 and sell it today you would earn a total of 17.00 from holding First Trust North or generate 0.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust North vs. Barclays ETN Select
Performance |
| Timeline |
| First Trust North |
| Barclays ETN Select |
First Trust and Barclays ETN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Barclays ETN
The main advantage of trading using opposite First Trust and Barclays ETN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Barclays ETN 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 Barclays ETN will offset losses from the drop in Barclays ETN's long position.| First Trust vs. Global X MLP | First Trust vs. Global X MLP | First Trust vs. First Trust Energy | First Trust vs. First Trust Preferred |
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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