Correlation Between First Trust and Klöckner
Can any of the company-specific risk be diversified away by investing in both First Trust and Klöckner 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 Klöckner 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 Klckner Co SE, you can compare the effects of market volatilities on First Trust and Klöckner 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 Klöckner. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Klöckner.
Diversification Opportunities for First Trust and Klöckner
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and Klöckner is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Dorsey and Klckner Co SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Klckner Co SE 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 Klöckner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Klckner Co SE has no effect on the direction of First Trust i.e., First Trust and Klöckner go up and down completely randomly.
Pair Corralation between First Trust and Klöckner
Given the investment horizon of 90 days First Trust Dorsey is expected to generate 1.06 times more return on investment than Klöckner. However, First Trust is 1.06 times more volatile than Klckner Co SE. It trades about 0.32 of its potential returns per unit of risk. Klckner Co SE is currently generating about 0.21 per unit of risk. If you would invest 3,411 in First Trust Dorsey on August 29, 2024 and sell it today you would earn a total of 236.00 from holding First Trust Dorsey or generate 6.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
First Trust Dorsey vs. Klckner Co SE
Performance |
| Timeline |
| First Trust Dorsey |
| Klckner Co SE |
First Trust and Klöckner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Klöckner
The main advantage of trading using opposite First Trust and Klöckner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Klöckner 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 Klöckner will offset losses from the drop in Klöckner's long position.| First Trust vs. JPMorgan BetaBuilders International | First Trust vs. JPMorgan Core Plus | First Trust vs. JPMorgan BetaBuilders Canada | First Trust vs. JPMorgan Emerging Markets |
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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