Correlation Between Advisors Inner and First Trust

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

By analyzing existing cross correlation between Advisors Inner Circle and First Trust Dow, you can compare the effects of market volatilities on Advisors Inner 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 Advisors Inner with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advisors Inner and First Trust.

Diversification Opportunities for Advisors Inner and First Trust

0.88

Correlation Coefficient

Advisors Inner  First Trust

Very poor diversification

The 3 months correlation between Advisors and First is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Advisors Inner Circle and First Trust Dow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Dow and Advisors Inner 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 Advisors Inner Circle 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 Dow has no effect on the direction of Advisors Inner i.e., Advisors Inner and First Trust go up and down completely randomly.

Pair Corralation between Advisors Inner and First Trust

Considering the 90-day investment horizon Advisors Inner Circle is expected to generate 0.45 times more return on investment than First Trust. However, Advisors Inner Circle is 2.24 times less risky than First Trust. It trades about 0.19 of its potential returns per unit of risk. First Trust Dow is currently generating about 0.08 per unit of risk. If you would invest  2,900  in Advisors Inner Circle on July 24, 2025 and sell it today you would earn a total of  229.00  from holding Advisors Inner Circle or generate 7.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Advisors Inner Circle  vs.  First Trust Dow

Advisors Inner Circle

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Advisors Inner Circle are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Advisors Inner may actually be approaching a critical reversion point that can send shares even higher in November 2025.

First Trust Dow

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Dow are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, First Trust may actually be approaching a critical reversion point that can send shares even higher in November 2025.

Pair Trading with Advisors Inner and First Trust

The main advantage of trading using opposite Advisors Inner and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advisors Inner 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.

The idea behind Advisors Inner Circle and First Trust Dow 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.