Correlation Between ANT and First Trust
Can any of the company-specific risk be diversified away by investing in both ANT 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 ANT and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ANT and First Trust Dorsey, you can compare the effects of market volatilities on ANT 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 ANT with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of ANT and First Trust.
Diversification Opportunities for ANT and First Trust
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ANT and First is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding ANT and First Trust Dorsey in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Dorsey and ANT 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 ANT 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 Dorsey has no effect on the direction of ANT i.e., ANT and First Trust go up and down completely randomly.
Pair Corralation between ANT and First Trust
Assuming the 90 days trading horizon ANT is expected to generate 30.98 times more return on investment than First Trust. However, ANT is 30.98 times more volatile than First Trust Dorsey. It trades about 0.09 of its potential returns per unit of risk. First Trust Dorsey is currently generating about -0.04 per unit of risk. If you would invest 147.00 in ANT on October 20, 2024 and sell it today you would earn a total of 0.00 from holding ANT or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
ANT vs. First Trust Dorsey
Performance |
| Timeline |
| ANT |
| First Trust Dorsey |
ANT and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ANT and First Trust
The main advantage of trading using opposite ANT and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ANT 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 ANT and First Trust Dorsey 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.| First Trust vs. First Trust Dorsey | First Trust vs. First Trust Emerging | First Trust vs. First Trust Dorsey | First Trust vs. First Trust Developed |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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