Correlation Between Flaherty Crumrine and First Trust

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

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

Diversification Opportunities for Flaherty Crumrine and First Trust

0.98

Correlation Coefficient

Flaherty Crumrine  First Trust

Almost no diversification

The 3 months correlation between Flaherty and First is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Flaherty Crumrine Preferred and First Trust Intermediate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Intermediate and Flaherty Crumrine 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 Flaherty Crumrine Preferred 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 Intermediate has no effect on the direction of Flaherty Crumrine i.e., Flaherty Crumrine and First Trust go up and down completely randomly.

Pair Corralation between Flaherty Crumrine and First Trust

Considering the 90-day investment horizon Flaherty Crumrine is expected to generate 1.23 times less return on investment than First Trust. In addition to that, Flaherty Crumrine is 1.29 times more volatile than First Trust Intermediate. It trades about 0.17 of its total potential returns per unit of risk. First Trust Intermediate is currently generating about 0.27 per unit of volatility. If you would invest  1,760  in First Trust Intermediate on May 13, 2025 and sell it today you would earn a total of  130.00  from holding First Trust Intermediate or generate 7.39% return on investment over 90 days.

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

Flaherty Crumrine Preferred  vs.  First Trust Intermediate

Flaherty Crumrine

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Flaherty Crumrine Preferred are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather sound technical and fundamental indicators, Flaherty Crumrine is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

First Trust Intermediate

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Intermediate are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly fragile basic indicators, First Trust may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Flaherty Crumrine and First Trust

The main advantage of trading using opposite Flaherty Crumrine and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flaherty Crumrine 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 Flaherty Crumrine Preferred and First Trust Intermediate 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.