Correlation Between First Trust and Saba Closed
Can any of the company-specific risk be diversified away by investing in both First Trust and Saba Closed 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 Saba Closed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Dorsey and Saba Closed End Funds, you can compare the effects of market volatilities on First Trust and Saba Closed 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 Saba Closed. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Saba Closed.
Diversification Opportunities for First Trust and Saba Closed
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between First and Saba is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Dorsey and Saba Closed End Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saba Closed End 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 Dorsey are associated (or correlated) with Saba Closed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saba Closed End has no effect on the direction of First Trust i.e., First Trust and Saba Closed go up and down completely randomly.
Pair Corralation between First Trust and Saba Closed
Given the investment horizon of 90 days First Trust Dorsey is expected to generate 1.62 times more return on investment than Saba Closed. However, First Trust is 1.62 times more volatile than Saba Closed End Funds. It trades about 0.17 of its potential returns per unit of risk. Saba Closed End Funds is currently generating about 0.04 per unit of risk. If you would invest 2,521 in First Trust Dorsey on August 30, 2024 and sell it today you would earn a total of 188.00 from holding First Trust Dorsey or generate 7.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Dorsey vs. Saba Closed End Funds
Performance |
| Timeline |
| First Trust Dorsey |
| Saba Closed End |
First Trust and Saba Closed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Saba Closed
The main advantage of trading using opposite First Trust and Saba Closed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Saba Closed 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 Saba Closed will offset losses from the drop in Saba Closed's long position.| First Trust vs. Freedom Day Dividend | First Trust vs. Franklin Templeton ETF | First Trust vs. iShares MSCI China | First Trust vs. Tidal Trust II |
| Saba Closed vs. First Trust Income | Saba Closed vs. Invesco CEF Income | Saba Closed vs. GraniteShares HIPS High | Saba Closed vs. Amplify High Income |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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