Correlation Between IQ Healthy and First Trust

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

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

Diversification Opportunities for IQ Healthy and First Trust

0.57

Correlation Coefficient

IQ Healthy  First Trust

Very weak diversification

The 3 months correlation between HART and First is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding IQ Healthy Hearts and First Trust Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Income and IQ Healthy 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 IQ Healthy Hearts 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 Income has no effect on the direction of IQ Healthy i.e., IQ Healthy and First Trust go up and down completely randomly.

Pair Corralation between IQ Healthy and First Trust

Given the investment horizon of 90 days IQ Healthy is expected to generate 27.13 times less return on investment than First Trust. In addition to that, IQ Healthy is 1.86 times more volatile than First Trust Income. It trades about 0.01 of its total potential returns per unit of risk. First Trust Income is currently generating about 0.26 per unit of volatility. If you would invest  2,087  in First Trust Income on May 1, 2025 and sell it today you would earn a total of  167.00  from holding First Trust Income or generate 8.0% return on investment over 90 days.

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

IQ Healthy Hearts  vs.  First Trust Income

IQ Healthy Hearts

Risk-Adjusted Performance

Very Weak

Over the last 90 days IQ Healthy Hearts has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, IQ Healthy is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

First Trust Income

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Income are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent technical and fundamental indicators, First Trust may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with IQ Healthy and First Trust

The main advantage of trading using opposite IQ Healthy and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IQ Healthy 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 IQ Healthy Hearts and First Trust Income 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.