Correlation Between Mast Global and First Trust
Can any of the company-specific risk be diversified away by investing in both Mast Global 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 Mast Global and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mast Global Battery and First Trust Indxx, you can compare the effects of market volatilities on Mast Global 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 Mast Global with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mast Global and First Trust.
Diversification Opportunities for Mast Global and First Trust
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Mast and First is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Mast Global Battery and First Trust Indxx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Indxx and Mast Global 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 Mast Global Battery 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 Indxx has no effect on the direction of Mast Global i.e., Mast Global and First Trust go up and down completely randomly.
Pair Corralation between Mast Global and First Trust
Allowing for the 90-day total investment horizon Mast Global Battery is expected to under-perform the First Trust. In addition to that, Mast Global is 1.32 times more volatile than First Trust Indxx. It trades about -0.01 of its total potential returns per unit of risk. First Trust Indxx is currently generating about 0.01 per unit of volatility. If you would invest 2,479 in First Trust Indxx on September 2, 2024 and sell it today you would earn a total of 5.00 from holding First Trust Indxx or generate 0.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mast Global Battery vs. First Trust Indxx
Performance |
| Timeline |
| Mast Global Battery |
| First Trust Indxx |
Mast Global and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mast Global and First Trust
The main advantage of trading using opposite Mast Global and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mast Global 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.| Mast Global vs. Freedom Day Dividend | Mast Global vs. iShares MSCI China | Mast Global vs. iShares Dividend and | Mast Global vs. SmartETFs Dividend Builder |
| First Trust vs. First Trust Indxx | First Trust vs. First Trust Nasdaq | First Trust vs. First Trust Nasdaq | First Trust vs. First Trust Nasdaq |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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