Correlation Between First Trust/confluence and Moderate Balanced

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

By analyzing existing cross correlation between First Trustconfluence Small and Moderate Balanced Allocation, you can compare the effects of market volatilities on First Trust/confluence and Moderate Balanced 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/confluence with a short position of Moderate Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust/confluence and Moderate Balanced.

Diversification Opportunities for First Trust/confluence and Moderate Balanced

0.26

Correlation Coefficient

First Trust/confluence  Moderate Balanced

Modest diversification

The 3 months correlation between FIRST and Moderate is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding First Trustconfluence Small and Moderate Balanced Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moderate Balanced and First Trust/confluence 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 Trustconfluence Small are associated (or correlated) with Moderate Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moderate Balanced has no effect on the direction of First Trust/confluence i.e., First Trust/confluence and Moderate Balanced go up and down completely randomly.

Pair Corralation between First Trust/confluence and Moderate Balanced

Assuming the 90 days horizon First Trustconfluence Small is expected to under-perform the Moderate Balanced. In addition to that, First Trust/confluence is 2.62 times more volatile than Moderate Balanced Allocation. It trades about -0.04 of its total potential returns per unit of risk. Moderate Balanced Allocation is currently generating about 0.18 per unit of volatility. If you would invest  1,192  in Moderate Balanced Allocation on May 14, 2025 and sell it today you would earn a total of  58.00  from holding Moderate Balanced Allocation or generate 4.87% return on investment over 90 days.

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

First Trustconfluence Small  vs.  Moderate Balanced Allocation

First Trust/confluence

Risk-Adjusted Performance

Weakest

Over the last 90 days First Trustconfluence Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, First Trust/confluence is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Moderate Balanced

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Moderate Balanced Allocation are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Moderate Balanced is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with First Trust/confluence and Moderate Balanced

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

The idea behind First Trustconfluence Small and Moderate Balanced Allocation 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.