Correlation Between Abrdn Physical and First Trust

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

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

Diversification Opportunities for Abrdn Physical and First Trust

0.9

Correlation Coefficient

Abrdn Physical  First Trust

Almost no diversification

The 3 months correlation between Abrdn and First is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding abrdn Physical Palladium 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 Abrdn Physical 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 abrdn Physical Palladium 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 Abrdn Physical i.e., Abrdn Physical and First Trust go up and down completely randomly.

Pair Corralation between Abrdn Physical and First Trust

Given the investment horizon of 90 days abrdn Physical Palladium is expected to generate 6.86 times more return on investment than First Trust. However, Abrdn Physical is 6.86 times more volatile than First Trust Exchange Traded. It trades about 0.25 of its potential returns per unit of risk. First Trust Exchange Traded is currently generating about 0.16 per unit of risk. If you would invest  8,582  in abrdn Physical Palladium on April 25, 2025 and sell it today you would earn a total of  3,120  from holding abrdn Physical Palladium or generate 36.36% return on investment over 90 days.

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

abrdn Physical Palladium  vs.  First Trust Exchange Traded

abrdn Physical Palladium

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in abrdn Physical Palladium are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite quite weak essential indicators, Abrdn Physical disclosed solid returns over the last few months and may actually be approaching a breakup point.

First Trust Exchange

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Exchange Traded are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, First Trust is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Abrdn Physical and First Trust

The main advantage of trading using opposite Abrdn Physical and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Abrdn Physical 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 abrdn Physical Palladium 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.