Correlation Between Fm Emerald and First Trust

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

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

Diversification Opportunities for Fm Emerald and First Trust

0.0

Correlation Coefficient

Fm Emerald  First Trust

Pay attention - limited upside

The 3 months correlation between LFSC and First is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Fm Emerald Life and First Trust Exchange Traded in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Exchange and Fm Emerald 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 Fm Emerald Life 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 Exchange has no effect on the direction of Fm Emerald i.e., Fm Emerald and First Trust go up and down completely randomly.

Pair Corralation between Fm Emerald and First Trust

If you would invest (100.00) in Fm Emerald Life on May 11, 2025 and sell it today you would earn a total of  100.00  from holding Fm Emerald Life or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Fm Emerald Life  vs.  First Trust Exchange Traded

Fm Emerald Life

Risk-Adjusted Performance

Fair

Over the last 90 days Fm Emerald Life has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Fm Emerald is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

First Trust Exchange

Risk-Adjusted Performance

Weakest

Over the last 90 days First Trust Exchange Traded has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, First Trust is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Fm Emerald and First Trust

The main advantage of trading using opposite Fm Emerald and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fm Emerald 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 Fm Emerald Life and First Trust Exchange Traded 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.

Check out your portfolio center.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.