Correlation Between First Trust and AllianzIM Equity
Can any of the company-specific risk be diversified away by investing in both First Trust and AllianzIM Equity 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 First Trust and AllianzIM Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Cboe and AllianzIM Equity Buffer15, you can compare the effects of market volatilities on First Trust and AllianzIM Equity 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 First Trust with a short position of AllianzIM Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and AllianzIM Equity.
Diversification Opportunities for First Trust and AllianzIM Equity
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and AllianzIM is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Cboe and AllianzIM Equity Buffer15 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AllianzIM Equity Buffer15 and First Trust 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 First Trust Cboe are associated (or correlated) with AllianzIM Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AllianzIM Equity Buffer15 has no effect on the direction of First Trust i.e., First Trust and AllianzIM Equity go up and down completely randomly.
Pair Corralation between First Trust and AllianzIM Equity
Given the investment horizon of 90 days First Trust is expected to generate 1.06 times less return on investment than AllianzIM Equity. But when comparing it to its historical volatility, First Trust Cboe is 1.68 times less risky than AllianzIM Equity. It trades about 0.22 of its potential returns per unit of risk. AllianzIM Equity Buffer15 is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 2,566 in AllianzIM Equity Buffer15 on August 29, 2024 and sell it today you would earn a total of 53.00 from holding AllianzIM Equity Buffer15 or generate 2.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
First Trust Cboe vs. AllianzIM Equity Buffer15
Performance |
| Timeline |
| First Trust Cboe |
| AllianzIM Equity Buffer15 |
First Trust and AllianzIM Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and AllianzIM Equity
The main advantage of trading using opposite First Trust and AllianzIM Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, AllianzIM Equity 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 AllianzIM Equity will offset losses from the drop in AllianzIM Equity's long position.| First Trust vs. FT Cboe Vest | First Trust vs. First Trust Exchange Traded | First Trust vs. FT Cboe Vest | First Trust vs. FT Cboe Vest |
| AllianzIM Equity vs. FT Vest Equity | AllianzIM Equity vs. Northern Lights | AllianzIM Equity vs. Dimensional International High | AllianzIM Equity vs. First Trust Exchange Traded |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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