Correlation Between First Trust and Avantis Core
Can any of the company-specific risk be diversified away by investing in both First Trust and Avantis Core 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 Avantis Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Exchange Traded and Avantis Core Fixed, you can compare the effects of market volatilities on First Trust and Avantis Core 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 Avantis Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Avantis Core.
Diversification Opportunities for First Trust and Avantis Core
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and Avantis is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Exchange Traded and Avantis Core Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avantis Core Fixed 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 Exchange Traded are associated (or correlated) with Avantis Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avantis Core Fixed has no effect on the direction of First Trust i.e., First Trust and Avantis Core go up and down completely randomly.
Pair Corralation between First Trust and Avantis Core
Given the investment horizon of 90 days First Trust is expected to generate 1.51 times less return on investment than Avantis Core. But when comparing it to its historical volatility, First Trust Exchange Traded is 1.84 times less risky than Avantis Core. It trades about 0.17 of its potential returns per unit of risk. Avantis Core Fixed is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 4,116 in Avantis Core Fixed on August 20, 2025 and sell it today you would earn a total of 73.00 from holding Avantis Core Fixed or generate 1.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 98.44% |
| Values | Daily Returns |
First Trust Exchange Traded vs. Avantis Core Fixed
Performance |
| Timeline |
| First Trust Exchange |
| Avantis Core Fixed |
First Trust and Avantis Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Avantis Core
The main advantage of trading using opposite First Trust and Avantis Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Avantis Core 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 Avantis Core will offset losses from the drop in Avantis Core's long position.| First Trust vs. Global X Funds | First Trust vs. Invesco Variable Rate | First Trust vs. FlexShares Ready Access | First Trust vs. Avantis Core Fixed |
| Avantis Core vs. First Trust Exchange Traded | Avantis Core vs. AB Ultra Short | Avantis Core vs. Invesco Variable Rate | Avantis Core vs. Janus Detroit Street |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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