Correlation Between First Trust and First Trustconfluence
Can any of the company-specific risk be diversified away by investing in both First Trust and First Trustconfluence 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 First Trustconfluence into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Managed and First Trustconfluence Small, you can compare the effects of market volatilities on First Trust and First Trustconfluence 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 First Trustconfluence. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and First Trustconfluence.
Diversification Opportunities for First Trust and First Trustconfluence
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and First is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Managed and First Trustconfluence Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trustconfluence 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 Managed are associated (or correlated) with First Trustconfluence. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trustconfluence has no effect on the direction of First Trust i.e., First Trust and First Trustconfluence go up and down completely randomly.
Pair Corralation between First Trust and First Trustconfluence
Assuming the 90 days horizon First Trust is expected to generate 55.89 times less return on investment than First Trustconfluence. But when comparing it to its historical volatility, First Trust Managed is 8.37 times less risky than First Trustconfluence. It trades about 0.01 of its potential returns per unit of risk. First Trustconfluence Small is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,653 in First Trustconfluence Small on April 26, 2025 and sell it today you would earn a total of 156.00 from holding First Trustconfluence Small or generate 5.88% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
First Trust Managed vs. First Trustconfluence Small
Performance |
Timeline |
First Trust Managed |
First Trustconfluence |
First Trust and First Trustconfluence Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with First Trust and First Trustconfluence
The main advantage of trading using opposite First Trust and First Trustconfluence positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, First Trustconfluence 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 Trustconfluence will offset losses from the drop in First Trustconfluence's long position.First Trust vs. Shelton E Value | First Trust vs. Nova Fund Class | First Trust vs. Ab E Opportunities | First Trust vs. Ab Value Fund |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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