Correlation Between First Trust and Unlimited HFEQ
Can any of the company-specific risk be diversified away by investing in both First Trust and Unlimited HFEQ 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 Unlimited HFEQ 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 Unlimited HFEQ Equity, you can compare the effects of market volatilities on First Trust and Unlimited HFEQ 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 Unlimited HFEQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Unlimited HFEQ.
Diversification Opportunities for First Trust and Unlimited HFEQ
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and Unlimited is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Bloomberg and Unlimited HFEQ Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unlimited HFEQ Equity 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 Unlimited HFEQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unlimited HFEQ Equity has no effect on the direction of First Trust i.e., First Trust and Unlimited HFEQ go up and down completely randomly.
Pair Corralation between First Trust and Unlimited HFEQ
Given the investment horizon of 90 days First Trust is expected to generate 2.16 times less return on investment than Unlimited HFEQ. But when comparing it to its historical volatility, First Trust Bloomberg is 1.5 times less risky than Unlimited HFEQ. It trades about 0.08 of its potential returns per unit of risk. Unlimited HFEQ Equity is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,063 in Unlimited HFEQ Equity on September 2, 2025 and sell it today you would earn a total of 237.00 from holding Unlimited HFEQ Equity or generate 11.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Bloomberg vs. Unlimited HFEQ Equity
Performance |
| Timeline |
| First Trust Bloomberg |
| Unlimited HFEQ Equity |
First Trust and Unlimited HFEQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Unlimited HFEQ
The main advantage of trading using opposite First Trust and Unlimited HFEQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Unlimited HFEQ 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 Unlimited HFEQ will offset losses from the drop in Unlimited HFEQ's long position.| First Trust vs. Strategy Shares | First Trust vs. Freedom Day Dividend | First Trust vs. Franklin Templeton ETF | First Trust vs. iShares MSCI China |
| Unlimited HFEQ vs. Strategy Shares | Unlimited HFEQ vs. Freedom Day Dividend | Unlimited HFEQ vs. Franklin Templeton ETF | Unlimited HFEQ vs. iShares MSCI China |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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