Correlation Between First Trust and New Germany
Can any of the company-specific risk be diversified away by investing in both First Trust and New Germany 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 New Germany into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Dynamic and New Germany Closed, you can compare the effects of market volatilities on First Trust and New Germany 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 New Germany. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and New Germany.
Diversification Opportunities for First Trust and New Germany
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between First and New is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Dynamic and New Germany Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Germany Closed 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 Dynamic are associated (or correlated) with New Germany. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Germany Closed has no effect on the direction of First Trust i.e., First Trust and New Germany go up and down completely randomly.
Pair Corralation between First Trust and New Germany
If you would invest 1,364 in First Trust Dynamic on September 2, 2024 and sell it today you would earn a total of 0.00 from holding First Trust Dynamic or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
First Trust Dynamic vs. New Germany Closed
Performance |
| Timeline |
| First Trust Dynamic |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| New Germany Closed |
First Trust and New Germany Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and New Germany
The main advantage of trading using opposite First Trust and New Germany positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, New Germany 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 New Germany will offset losses from the drop in New Germany's long position.| First Trust vs. New Germany Closed | First Trust vs. Eagle Point Income | First Trust vs. Western Asset High | First Trust vs. Nuveen New York |
| New Germany vs. NXG NextGen Infrastructure | New Germany vs. Taiwan Closed | New Germany vs. Japan Smaller Capitalization | New Germany vs. MFS Charter Income |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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