Correlation Between KFA Value and First Trust
Can any of the company-specific risk be diversified away by investing in both KFA Value and First Trust 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 KFA Value and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KFA Value Line and First Trust Nasdaq, you can compare the effects of market volatilities on KFA Value and First Trust 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 KFA Value with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of KFA Value and First Trust.
Diversification Opportunities for KFA Value and First Trust
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between KFA and First is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding KFA Value Line and First Trust Nasdaq in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Nasdaq and KFA Value 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 KFA Value Line are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Nasdaq has no effect on the direction of KFA Value i.e., KFA Value and First Trust go up and down completely randomly.
Pair Corralation between KFA Value and First Trust
Given the investment horizon of 90 days KFA Value is expected to generate 3.66 times less return on investment than First Trust. But when comparing it to its historical volatility, KFA Value Line is 1.78 times less risky than First Trust. It trades about 0.05 of its potential returns per unit of risk. First Trust Nasdaq is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3,438 in First Trust Nasdaq on August 31, 2025 and sell it today you would earn a total of 253.00 from holding First Trust Nasdaq or generate 7.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KFA Value Line vs. First Trust Nasdaq
Performance |
| Timeline |
| KFA Value Line |
| First Trust Nasdaq |
KFA Value and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KFA Value and First Trust
The main advantage of trading using opposite KFA Value and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KFA Value position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| KFA Value vs. Strategy Shares | KFA Value vs. Freedom Day Dividend | KFA Value vs. Franklin Templeton ETF | KFA Value vs. iShares MSCI China |
| First Trust vs. First Trust Indxx | First Trust vs. Direxion Daily Industrials | First Trust vs. Themes Transatlantic Defense | First Trust vs. FlexShares STOXX Global |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes |