Correlation Between First Trust and SGI Enhanced

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

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

Diversification Opportunities for First Trust and SGI Enhanced

0.71

Correlation Coefficient

First Trust  SGI Enhanced

Poor diversification

The 3 months correlation between First and SGI is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Mid and SGI Enhanced Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SGI Enhanced Market 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 Mid are associated (or correlated) with SGI Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SGI Enhanced Market has no effect on the direction of First Trust i.e., First Trust and SGI Enhanced go up and down completely randomly.

Pair Corralation between First Trust and SGI Enhanced

Considering the 90-day investment horizon First Trust is expected to generate 1.66 times less return on investment than SGI Enhanced. In addition to that, First Trust is 1.68 times more volatile than SGI Enhanced Market. It trades about 0.07 of its total potential returns per unit of risk. SGI Enhanced Market is currently generating about 0.2 per unit of volatility. If you would invest  2,972  in SGI Enhanced Market on July 5, 2025 and sell it today you would earn a total of  245.00  from holding SGI Enhanced Market or generate 8.24% return on investment over 90 days.

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

First Trust Mid  vs.  SGI Enhanced Market

First Trust Mid

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Mid are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, First Trust is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

SGI Enhanced Market

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SGI Enhanced Market are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, SGI Enhanced may actually be approaching a critical reversion point that can send shares even higher in November 2025.

Pair Trading with First Trust and SGI Enhanced

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

The idea behind First Trust Mid and SGI Enhanced Market 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.