Correlation Between First Trust and Defiance ETFs
Can any of the company-specific risk be diversified away by investing in both First Trust and Defiance ETFs 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 Defiance ETFs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Dividend and Defiance ETFs, you can compare the effects of market volatilities on First Trust and Defiance ETFs 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 Defiance ETFs. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Defiance ETFs.
Diversification Opportunities for First Trust and Defiance ETFs
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and Defiance is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Dividend and Defiance ETFs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Defiance ETFs 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 Dividend are associated (or correlated) with Defiance ETFs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Defiance ETFs has no effect on the direction of First Trust i.e., First Trust and Defiance ETFs go up and down completely randomly.
Pair Corralation between First Trust and Defiance ETFs
If you would invest 5,567 in First Trust Dividend on August 29, 2025 and sell it today you would earn a total of 6.00 from holding First Trust Dividend or generate 0.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 1.59% |
| Values | Daily Returns |
First Trust Dividend vs. Defiance ETFs
Performance |
| Timeline |
| First Trust Dividend |
| Defiance ETFs |
Risk-Adjusted Performance
Weakest
Weak | Strong |
First Trust and Defiance ETFs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Defiance ETFs
The main advantage of trading using opposite First Trust and Defiance ETFs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Defiance ETFs 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 Defiance ETFs will offset losses from the drop in Defiance ETFs' long position.| First Trust vs. Vanguard Mid Cap Value | First Trust vs. SPDR SP Dividend | First Trust vs. iShares Russell Mid Cap | First Trust vs. SPDR Portfolio SP |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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