Correlation Between First Trust and Koppers Holdings
Can any of the company-specific risk be diversified away by investing in both First Trust and Koppers Holdings 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 Koppers Holdings 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 Koppers Holdings, you can compare the effects of market volatilities on First Trust and Koppers Holdings 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 Koppers Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Koppers Holdings.
Diversification Opportunities for First Trust and Koppers Holdings
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between First and Koppers is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Dorsey and Koppers Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koppers Holdings 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 Koppers Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koppers Holdings has no effect on the direction of First Trust i.e., First Trust and Koppers Holdings go up and down completely randomly.
Pair Corralation between First Trust and Koppers Holdings
Given the investment horizon of 90 days First Trust is expected to generate 1.55 times less return on investment than Koppers Holdings. But when comparing it to its historical volatility, First Trust Dorsey is 3.32 times less risky than Koppers Holdings. It trades about 0.32 of its potential returns per unit of risk. Koppers Holdings is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 3,481 in Koppers Holdings on August 29, 2024 and sell it today you would earn a total of 348.00 from holding Koppers Holdings or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Dorsey vs. Koppers Holdings
Performance |
| Timeline |
| First Trust Dorsey |
| Koppers Holdings |
First Trust and Koppers Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Koppers Holdings
The main advantage of trading using opposite First Trust and Koppers Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Koppers Holdings 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 Koppers Holdings will offset losses from the drop in Koppers Holdings' 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 |
| Koppers Holdings vs. H B Fuller | Koppers Holdings vs. Minerals Technologies | Koppers Holdings vs. Quaker Chemical | Koppers Holdings vs. Oil Dri |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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