Correlation Between Doubleline Opportunistic and First Trust
Can any of the company-specific risk be diversified away by investing in both Doubleline Opportunistic 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 Doubleline Opportunistic and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Doubleline Opportunistic Credit and First Trust Senior, you can compare the effects of market volatilities on Doubleline Opportunistic 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 Doubleline Opportunistic with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Doubleline Opportunistic and First Trust.
Diversification Opportunities for Doubleline Opportunistic and First Trust
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Doubleline and First is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Doubleline Opportunistic Credi and First Trust Senior in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Senior and Doubleline Opportunistic 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 Doubleline Opportunistic Credit 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 Senior has no effect on the direction of Doubleline Opportunistic i.e., Doubleline Opportunistic and First Trust go up and down completely randomly.
Pair Corralation between Doubleline Opportunistic and First Trust
Considering the 90-day investment horizon Doubleline Opportunistic is expected to generate 1.14 times less return on investment than First Trust. But when comparing it to its historical volatility, Doubleline Opportunistic Credit is 1.08 times less risky than First Trust. It trades about 0.17 of its potential returns per unit of risk. First Trust Senior is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 1,023 in First Trust Senior on August 28, 2024 and sell it today you would earn a total of 21.00 from holding First Trust Senior or generate 2.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Doubleline Opportunistic Credi vs. First Trust Senior
Performance |
| Timeline |
| Doubleline Opportunistic |
| First Trust Senior |
Doubleline Opportunistic and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Doubleline Opportunistic and First Trust
The main advantage of trading using opposite Doubleline Opportunistic and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Doubleline Opportunistic 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 Doubleline Opportunistic Credit and First Trust Senior 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.
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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