Correlation Between Inspire International and First Trust
Can any of the company-specific risk be diversified away by investing in both Inspire International 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 Inspire International and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inspire International ESG and First Trust Preferred, you can compare the effects of market volatilities on Inspire International 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 Inspire International with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inspire International and First Trust.
Diversification Opportunities for Inspire International and First Trust
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Inspire and First is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Inspire International ESG and First Trust Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Preferred and Inspire International 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 Inspire International ESG 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 Preferred has no effect on the direction of Inspire International i.e., Inspire International and First Trust go up and down completely randomly.
Pair Corralation between Inspire International and First Trust
Given the investment horizon of 90 days Inspire International ESG is expected to generate 3.11 times more return on investment than First Trust. However, Inspire International is 3.11 times more volatile than First Trust Preferred. It trades about 0.11 of its potential returns per unit of risk. First Trust Preferred is currently generating about 0.07 per unit of risk. If you would invest 3,074 in Inspire International ESG on March 30, 2025 and sell it today you would earn a total of 336.00 from holding Inspire International ESG or generate 10.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.41% |
| Values | Daily Returns |
Inspire International ESG vs. First Trust Preferred
Performance |
| Timeline |
| Inspire International ESG |
| First Trust Preferred |
Inspire International and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inspire International and First Trust
The main advantage of trading using opposite Inspire International and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inspire International 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.| Inspire International vs. Northern Lights | Inspire International vs. Inspire SmallMid Cap | Inspire International vs. Inspire Global Hope | Inspire International vs. Inspire Tactical Balanced |
| First Trust vs. Invesco Variable Rate | First Trust vs. VanEck Preferred Securities | First Trust vs. First Trust Tactical | First Trust vs. First Trust Senior |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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