Correlation Between Edinburgh Worldwide and FIRST TRUST

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Can any of the company-specific risk be diversified away by investing in both Edinburgh Worldwide 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 Edinburgh Worldwide and FIRST TRUST into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Edinburgh Worldwide Investment and FIRST TRUST GLOBAL, you can compare the effects of market volatilities on Edinburgh Worldwide 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 Edinburgh Worldwide with a short position of FIRST TRUST. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edinburgh Worldwide and FIRST TRUST.

Diversification Opportunities for Edinburgh Worldwide and FIRST TRUST

0.25
  Correlation Coefficient

Modest diversification

The 3 months correlation between Edinburgh and FIRST is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Edinburgh Worldwide Investment and FIRST TRUST GLOBAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIRST TRUST GLOBAL and Edinburgh Worldwide 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 Edinburgh Worldwide Investment 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 GLOBAL has no effect on the direction of Edinburgh Worldwide i.e., Edinburgh Worldwide and FIRST TRUST go up and down completely randomly.

Pair Corralation between Edinburgh Worldwide and FIRST TRUST

Assuming the 90 days trading horizon Edinburgh Worldwide Investment is expected to under-perform the FIRST TRUST. In addition to that, Edinburgh Worldwide is 1.7 times more volatile than FIRST TRUST GLOBAL. It trades about -0.29 of its total potential returns per unit of risk. FIRST TRUST GLOBAL is currently generating about -0.03 per unit of volatility. If you would invest  164,520  in FIRST TRUST GLOBAL on December 11, 2024 and sell it today you would lose (2,290) from holding FIRST TRUST GLOBAL or give up 1.39% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Edinburgh Worldwide Investment  vs.  FIRST TRUST GLOBAL

 Performance 
       Timeline  
Edinburgh Worldwide 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Edinburgh Worldwide Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Etf's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.
FIRST TRUST GLOBAL 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days FIRST TRUST GLOBAL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, FIRST TRUST is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Edinburgh Worldwide and FIRST TRUST Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Edinburgh Worldwide and FIRST TRUST

The main advantage of trading using opposite Edinburgh Worldwide and FIRST TRUST positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edinburgh Worldwide 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.
The idea behind Edinburgh Worldwide Investment and FIRST TRUST GLOBAL pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.

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