Correlation Between First Trust and LHA Market
Can any of the company-specific risk be diversified away by investing in both First Trust and LHA Market 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 LHA Market into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Alternative and LHA Market State, you can compare the effects of market volatilities on First Trust and LHA Market 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 LHA Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and LHA Market.
Diversification Opportunities for First Trust and LHA Market
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and LHA is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Alternative and LHA Market State in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LHA Market State 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 Alternative are associated (or correlated) with LHA Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LHA Market State has no effect on the direction of First Trust i.e., First Trust and LHA Market go up and down completely randomly.
Pair Corralation between First Trust and LHA Market
Given the investment horizon of 90 days First Trust Alternative is expected to generate 1.19 times more return on investment than LHA Market. However, First Trust is 1.19 times more volatile than LHA Market State. It trades about 0.06 of its potential returns per unit of risk. LHA Market State is currently generating about 0.05 per unit of risk. If you would invest 2,779 in First Trust Alternative on August 30, 2024 and sell it today you would earn a total of 24.00 from holding First Trust Alternative or generate 0.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Alternative vs. LHA Market State
Performance |
| Timeline |
| First Trust Alternative |
| LHA Market State |
First Trust and LHA Market Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and LHA Market
The main advantage of trading using opposite First Trust and LHA Market positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, LHA Market 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 LHA Market will offset losses from the drop in LHA Market's long position.| First Trust vs. First Trust Emerging | First Trust vs. First Trust Income | First Trust vs. First Trust SSI | First Trust vs. First Trust Indxx |
| LHA Market vs. Alpha Architect Quantitative | LHA Market vs. Alpha Architect International | LHA Market vs. Alpha Architect International | LHA Market vs. Alpha Architect Quantitative |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device |