Correlation Between Even Herd and First Trust
Can any of the company-specific risk be diversified away by investing in both Even Herd 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 Even Herd and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Even Herd Long and First Trust LongShort, you can compare the effects of market volatilities on Even Herd 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 Even Herd with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Even Herd and First Trust.
Diversification Opportunities for Even Herd and First Trust
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Even and First is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Even Herd Long and First Trust LongShort in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust LongShort and Even Herd 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 Even Herd Long 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 LongShort has no effect on the direction of Even Herd i.e., Even Herd and First Trust go up and down completely randomly.
Pair Corralation between Even Herd and First Trust
Given the investment horizon of 90 days Even Herd Long is expected to generate 1.48 times more return on investment than First Trust. However, Even Herd is 1.48 times more volatile than First Trust LongShort. It trades about 0.25 of its potential returns per unit of risk. First Trust LongShort is currently generating about 0.13 per unit of risk. If you would invest 2,051 in Even Herd Long on August 29, 2024 and sell it today you would earn a total of 293.00 from holding Even Herd Long or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Even Herd Long vs. First Trust LongShort
Performance |
| Timeline |
| Even Herd Long |
| First Trust LongShort |
Even Herd and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Even Herd and First Trust
The main advantage of trading using opposite Even Herd and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Even Herd 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.| Even Herd vs. FT Vest Equity | Even Herd vs. Zillow Group Class | Even Herd vs. Northern Lights | Even Herd vs. VanEck Vectors Moodys |
| First Trust vs. First Trust Managed | First Trust vs. IQ Hedge Multi Strategy | First Trust vs. First Trust BuyWrite | First Trust vs. SPDR SSgA Global |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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