Correlation Between First Trust and Tortoise Capital

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

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

Diversification Opportunities for First Trust and Tortoise Capital

0.95

Correlation Coefficient

First Trust  Tortoise Capital

Almost no diversification

The 3 months correlation between First and Tortoise is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding First Trust North and Tortoise Capital Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tortoise Capital Series 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 North are associated (or correlated) with Tortoise Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tortoise Capital Series has no effect on the direction of First Trust i.e., First Trust and Tortoise Capital go up and down completely randomly.

Pair Corralation between First Trust and Tortoise Capital

Given the investment horizon of 90 days First Trust is expected to generate 2.17 times less return on investment than Tortoise Capital. But when comparing it to its historical volatility, First Trust North is 1.09 times less risky than Tortoise Capital. It trades about 0.04 of its potential returns per unit of risk. Tortoise Capital Series is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  3,536  in Tortoise Capital Series on March 17, 2025 and sell it today you would earn a total of  41.00  from holding Tortoise Capital Series or generate 1.16% return on investment over 90 days.

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

First Trust North  vs.  Tortoise Capital Series

First Trust North

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust North are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable essential indicators, First Trust is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Tortoise Capital Series

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tortoise Capital Series has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Tortoise Capital is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with First Trust and Tortoise Capital

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

The idea behind First Trust North and Tortoise Capital Series 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..