Correlation Between First Trust and Nelson Select
Can any of the company-specific risk be diversified away by investing in both First Trust and Nelson Select 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 Nelson Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Alternative and Nelson Select ETF, you can compare the effects of market volatilities on First Trust and Nelson Select 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 Nelson Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Nelson Select.
Diversification Opportunities for First Trust and Nelson Select
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and Nelson is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Alternative and Nelson Select ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nelson Select ETF 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 Alternative are associated (or correlated) with Nelson Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nelson Select ETF has no effect on the direction of First Trust i.e., First Trust and Nelson Select go up and down completely randomly.
Pair Corralation between First Trust and Nelson Select
Given the investment horizon of 90 days First Trust is expected to generate 2.32 times less return on investment than Nelson Select. But when comparing it to its historical volatility, First Trust Alternative is 1.09 times less risky than Nelson Select. It trades about 0.03 of its potential returns per unit of risk. Nelson Select ETF is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,516 in Nelson Select ETF on September 4, 2025 and sell it today you would earn a total of 51.00 from holding Nelson Select ETF or generate 2.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 53.97% |
| Values | Daily Returns |
First Trust Alternative vs. Nelson Select ETF
Performance |
| Timeline |
| First Trust Alternative |
| Nelson Select ETF |
First Trust and Nelson Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Nelson Select
The main advantage of trading using opposite First Trust and Nelson Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Nelson Select 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 Nelson Select will offset losses from the drop in Nelson Select's long position.| First Trust vs. DGA Core Plus | First Trust vs. Draco Evolution AI | First Trust vs. ProShares VIX Mid Term | First Trust vs. ProShares VIX Short Term |
| Nelson Select vs. DGA Core Plus | Nelson Select vs. Draco Evolution AI | Nelson Select vs. ProShares VIX Mid Term | Nelson Select vs. ProShares VIX Short Term |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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