Correlation Between Ab Pennsylvania and First Trust
Can any of the company-specific risk be diversified away by investing in both Ab Pennsylvania 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 Ab Pennsylvania and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Pennsylvania Portfolio and First Trust United, you can compare the effects of market volatilities on Ab Pennsylvania 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 Ab Pennsylvania with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Pennsylvania and First Trust.
Diversification Opportunities for Ab Pennsylvania and First Trust
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between APAAX and First is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Ab Pennsylvania Portfolio and First Trust United in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust United and Ab Pennsylvania 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 Ab Pennsylvania Portfolio 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 United has no effect on the direction of Ab Pennsylvania i.e., Ab Pennsylvania and First Trust go up and down completely randomly.
Pair Corralation between Ab Pennsylvania and First Trust
Assuming the 90 days horizon Ab Pennsylvania is expected to generate 3.96 times less return on investment than First Trust. But when comparing it to its historical volatility, Ab Pennsylvania Portfolio is 4.88 times less risky than First Trust. It trades about 0.07 of its potential returns per unit of risk. First Trust United is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,983 in First Trust United on September 2, 2024 and sell it today you would earn a total of 1,003 from holding First Trust United or generate 33.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Pennsylvania Portfolio vs. First Trust United
Performance |
| Timeline |
| Ab Pennsylvania Portfolio |
| First Trust United |
Ab Pennsylvania and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Pennsylvania and First Trust
The main advantage of trading using opposite Ab Pennsylvania and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Pennsylvania 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.| Ab Pennsylvania vs. Jennison Natural Resources | Ab Pennsylvania vs. Gmo Resources | Ab Pennsylvania vs. Gamco Natural Resources | Ab Pennsylvania vs. Ivy Energy Fund |
| First Trust vs. First Trust Germany | First Trust vs. First Trust Switzerland | First Trust vs. First Trust Japan | First Trust vs. First Trust Asia |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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