Correlation Between First Trust and Xtrackers MSCI

Can any of the company-specific risk be diversified away by investing in both First Trust and Xtrackers MSCI 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 Xtrackers MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between First Trust LongShort and Xtrackers MSCI EAFE, you can compare the effects of market volatilities on First Trust and Xtrackers MSCI 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 Xtrackers MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Xtrackers MSCI.

Diversification Opportunities for First Trust and Xtrackers MSCI

0.38

Correlation Coefficient

First Trust  Xtrackers MSCI

Weak diversification

The 3 months correlation between First and Xtrackers is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding First Trust LongShort and Xtrackers MSCI EAFE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers MSCI EAFE 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 LongShort are associated (or correlated) with Xtrackers MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers MSCI EAFE has no effect on the direction of First Trust i.e., First Trust and Xtrackers MSCI go up and down completely randomly.

Pair Corralation between First Trust and Xtrackers MSCI

Given the investment horizon of 90 days First Trust LongShort is expected to generate 1.02 times more return on investment than Xtrackers MSCI. However, First Trust is 1.02 times more volatile than Xtrackers MSCI EAFE. It trades about 0.21 of its potential returns per unit of risk. Xtrackers MSCI EAFE is currently generating about 0.07 per unit of risk. If you would invest  6,603  in First Trust LongShort on August 5, 2025 and sell it today you would earn a total of  495.00  from holding First Trust LongShort or generate 7.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

First Trust LongShort  vs.  Xtrackers MSCI EAFE

First Trust LongShort

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust LongShort are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting essential indicators, First Trust may actually be approaching a critical reversion point that can send shares even higher in December 2025.

Xtrackers MSCI EAFE

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers MSCI EAFE are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Xtrackers MSCI is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with First Trust and Xtrackers MSCI

The main advantage of trading using opposite First Trust and Xtrackers MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Xtrackers MSCI 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 Xtrackers MSCI will offset losses from the drop in Xtrackers MSCI's long position.

The idea behind First Trust LongShort and Xtrackers MSCI EAFE pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.