Correlation Between First Trust and Horizon Funds
Can any of the company-specific risk be diversified away by investing in both First Trust and Horizon Funds 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 Horizon Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Bloomberg and Horizon Funds, you can compare the effects of market volatilities on First Trust and Horizon Funds 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 Horizon Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Horizon Funds.
Diversification Opportunities for First Trust and Horizon Funds
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Horizon is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Bloomberg and Horizon Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Funds 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 Bloomberg are associated (or correlated) with Horizon Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horizon Funds has no effect on the direction of First Trust i.e., First Trust and Horizon Funds go up and down completely randomly.
Pair Corralation between First Trust and Horizon Funds
Given the investment horizon of 90 days First Trust Bloomberg is expected to generate 57.28 times more return on investment than Horizon Funds. However, First Trust is 57.28 times more volatile than Horizon Funds. It trades about 0.04 of its potential returns per unit of risk. Horizon Funds is currently generating about 0.8 per unit of risk. If you would invest 2,133 in First Trust Bloomberg on August 20, 2025 and sell it today you would earn a total of 57.00 from holding First Trust Bloomberg or generate 2.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Bloomberg vs. Horizon Funds
Performance |
| Timeline |
| First Trust Bloomberg |
| Horizon Funds |
First Trust and Horizon Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Horizon Funds
The main advantage of trading using opposite First Trust and Horizon Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Horizon Funds 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 Horizon Funds will offset losses from the drop in Horizon Funds' long position.| First Trust vs. Ned Davis Research | First Trust vs. Unlimited HFEQ Equity | First Trust vs. Themes Infrastructure ETF | First Trust vs. Horizon Funds |
| Horizon Funds vs. Pacer Funds Trust | Horizon Funds vs. Ned Davis Research | Horizon Funds vs. First Trust Bloomberg | Horizon Funds vs. Unlimited HFEQ Equity |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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