Correlation Between ASPY and First Trust
Can any of the company-specific risk be diversified away by investing in both ASPY 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 ASPY and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ASPY and First Trust LongShort, you can compare the effects of market volatilities on ASPY 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 ASPY with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASPY and First Trust.
Diversification Opportunities for ASPY and First Trust
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between ASPY and First is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding ASPY and First Trust LongShort in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust LongShort and ASPY 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 ASPY 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 LongShort has no effect on the direction of ASPY i.e., ASPY and First Trust go up and down completely randomly.
Pair Corralation between ASPY and First Trust
If you would invest 6,452 in First Trust LongShort on August 27, 2024 and sell it today you would earn a total of 111.00 from holding First Trust LongShort or generate 1.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
ASPY vs. First Trust LongShort
Performance |
| Timeline |
| ASPY |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| First Trust LongShort |
ASPY and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASPY and First Trust
The main advantage of trading using opposite ASPY and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASPY 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 ASPY and First Trust LongShort 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 Managed | First Trust vs. IQ Hedge Multi Strategy | First Trust vs. First Trust BuyWrite | First Trust vs. SPDR SSgA Global |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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