Correlation Between Doubleline Emerging and First Trust

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

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

Diversification Opportunities for Doubleline Emerging and First Trust

0.98

Correlation Coefficient

Doubleline Emerging  First Trust

Almost no diversification

The 3 months correlation between Doubleline and First is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Doubleline Emerging Markets 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 Doubleline Emerging 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 Doubleline Emerging Markets 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 Doubleline Emerging i.e., Doubleline Emerging and First Trust go up and down completely randomly.

Pair Corralation between Doubleline Emerging and First Trust

Assuming the 90 days horizon Doubleline Emerging Markets is expected to generate 2.21 times more return on investment than First Trust. However, Doubleline Emerging is 2.21 times more volatile than First Trust Preferred. It trades about 0.3 of its potential returns per unit of risk. First Trust Preferred is currently generating about 0.5 per unit of risk. If you would invest  877.00  in Doubleline Emerging Markets on April 29, 2025 and sell it today you would earn a total of  48.00  from holding Doubleline Emerging Markets or generate 5.47% return on investment over 90 days.

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

Doubleline Emerging Markets  vs.  First Trust Preferred

Doubleline Emerging

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Doubleline Emerging Markets are ranked lower than 23 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Doubleline Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

First Trust Preferred

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Preferred are ranked lower than 39 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, First Trust is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Doubleline Emerging and First Trust

The main advantage of trading using opposite Doubleline Emerging and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Doubleline Emerging 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 Doubleline Emerging Markets and First Trust Preferred 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.