Correlation Between Invesco PHLX and First Trust
Can any of the company-specific risk be diversified away by investing in both Invesco PHLX 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 Invesco PHLX and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco PHLX Semiconductor and First Trust Exchange Traded, you can compare the effects of market volatilities on Invesco PHLX 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 Invesco PHLX with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco PHLX and First Trust.
Diversification Opportunities for Invesco PHLX and First Trust
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Invesco and First is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Invesco PHLX Semiconductor and First Trust Exchange Traded in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Exchange and Invesco PHLX 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 Invesco PHLX Semiconductor 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 Exchange has no effect on the direction of Invesco PHLX i.e., Invesco PHLX and First Trust go up and down completely randomly.
Pair Corralation between Invesco PHLX and First Trust
Given the investment horizon of 90 days Invesco PHLX Semiconductor is expected to generate 1.88 times more return on investment than First Trust. However, Invesco PHLX is 1.88 times more volatile than First Trust Exchange Traded. It trades about 0.38 of its potential returns per unit of risk. First Trust Exchange Traded is currently generating about 0.07 per unit of risk. If you would invest 3,013 in Invesco PHLX Semiconductor on April 22, 2025 and sell it today you would earn a total of 1,500 from holding Invesco PHLX Semiconductor or generate 49.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.41% |
| Values | Daily Returns |
Invesco PHLX Semiconductor vs. First Trust Exchange Traded
Performance |
| Timeline |
| Invesco PHLX Semicon |
| First Trust Exchange |
Invesco PHLX and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco PHLX and First Trust
The main advantage of trading using opposite Invesco PHLX and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco PHLX 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.| Invesco PHLX vs. Invesco Nasdaq Biotechnology | Invesco PHLX vs. First Trust Nasdaq | Invesco PHLX vs. SPDR SP Semiconductor | Invesco PHLX vs. Invesco Dynamic Semiconductors |
| First Trust vs. First Trust Exchange Traded | First Trust vs. First Trust Expanded | First Trust vs. BlackRock Future Health | First Trust vs. SPDR SP Health |
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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