Correlation Between Cabana Target and First Trust

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

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

Diversification Opportunities for Cabana Target and First Trust

0.9

Correlation Coefficient

Cabana Target  First Trust

Almost no diversification

The 3 months correlation between Cabana and First is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Cabana Target Drawdown and First Trust Multi Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Multi and Cabana Target 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 Cabana Target Drawdown 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 Multi has no effect on the direction of Cabana Target i.e., Cabana Target and First Trust go up and down completely randomly.

Pair Corralation between Cabana Target and First Trust

Given the investment horizon of 90 days Cabana Target Drawdown is expected to generate 0.57 times more return on investment than First Trust. However, Cabana Target Drawdown is 1.75 times less risky than First Trust. It trades about 0.17 of its potential returns per unit of risk. First Trust Multi Asset is currently generating about 0.08 per unit of risk. If you would invest  2,182  in Cabana Target Drawdown on May 3, 2025 and sell it today you would earn a total of  60.00  from holding Cabana Target Drawdown or generate 2.75% return on investment over 90 days.

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

Cabana Target Drawdown  vs.  First Trust Multi Asset

Cabana Target Drawdown

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cabana Target Drawdown are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Cabana Target is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

First Trust Multi

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Multi Asset are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable forward 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 Cabana Target and First Trust

The main advantage of trading using opposite Cabana Target and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cabana Target 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 Cabana Target Drawdown and First Trust Multi Asset 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 Commodity Directory module to find actively traded commodities issued by global exchanges.