Correlation Between First Trust and IQ Merger

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

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

Diversification Opportunities for First Trust and IQ Merger

0.13

Correlation Coefficient

First Trust  IQ Merger

Average diversification

The 3 months correlation between First and MNA is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Vivaldi and IQ Merger Arbitrage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQ Merger Arbitrage 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 Vivaldi are associated (or correlated) with IQ Merger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IQ Merger Arbitrage has no effect on the direction of First Trust i.e., First Trust and IQ Merger go up and down completely randomly.

Pair Corralation between First Trust and IQ Merger

Given the investment horizon of 90 days First Trust Vivaldi is expected to generate 1.88 times more return on investment than IQ Merger. However, First Trust is 1.88 times more volatile than IQ Merger Arbitrage. It trades about 0.11 of its potential returns per unit of risk. IQ Merger Arbitrage is currently generating about 0.01 per unit of risk. If you would invest  2,013  in First Trust Vivaldi on October 8, 2025 and sell it today you would earn a total of  47.00  from holding First Trust Vivaldi or generate 2.33% return on investment over 90 days.

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

First Trust Vivaldi  vs.  IQ Merger Arbitrage

First Trust Vivaldi

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Vivaldi are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, First Trust is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

IQ Merger Arbitrage

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in IQ Merger Arbitrage are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, IQ Merger is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with First Trust and IQ Merger

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

The idea behind First Trust Vivaldi and IQ Merger Arbitrage 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.