Correlation Between Cutler Equity and First Trust
Can any of the company-specific risk be diversified away by investing in both Cutler Equity 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 Cutler Equity and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cutler Equity and First Trust Short, you can compare the effects of market volatilities on Cutler Equity 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 Cutler Equity with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cutler Equity and First Trust.
Diversification Opportunities for Cutler Equity and First Trust
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cutler and First is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Cutler Equity and First Trust Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Short and Cutler Equity 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 Cutler Equity 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 Short has no effect on the direction of Cutler Equity i.e., Cutler Equity and First Trust go up and down completely randomly.
Pair Corralation between Cutler Equity and First Trust
Assuming the 90 days horizon Cutler Equity is expected to generate 3.86 times more return on investment than First Trust. However, Cutler Equity is 3.86 times more volatile than First Trust Short. It trades about 0.07 of its potential returns per unit of risk. First Trust Short is currently generating about 0.17 per unit of risk. If you would invest 2,295 in Cutler Equity on September 14, 2024 and sell it today you would earn a total of 588.00 from holding Cutler Equity or generate 25.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cutler Equity vs. First Trust Short
Performance |
| Timeline |
| Cutler Equity |
| First Trust Short |
Cutler Equity and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cutler Equity and First Trust
The main advantage of trading using opposite Cutler Equity and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cutler Equity 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.| Cutler Equity vs. Locorr Market Trend | Cutler Equity vs. Sp Midcap Index | Cutler Equity vs. Ab All Market | Cutler Equity vs. Transamerica Emerging Markets |
| First Trust vs. Cutler Equity | First Trust vs. Balanced Fund Retail | First Trust vs. Touchstone International Equity | First Trust vs. Gmo Global Equity |
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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