Correlation Between First Trust and Vivaldi Merger
Can any of the company-specific risk be diversified away by investing in both First Trust and Vivaldi Merger 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 Vivaldi Merger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Short and Vivaldi Merger Arbitrage, you can compare the effects of market volatilities on First Trust and Vivaldi Merger 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 Vivaldi Merger. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Vivaldi Merger.
Diversification Opportunities for First Trust and Vivaldi Merger
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between First and Vivaldi is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Short and Vivaldi Merger Arbitrage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vivaldi Merger Arbitrage 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 Short are associated (or correlated) with Vivaldi Merger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vivaldi Merger Arbitrage has no effect on the direction of First Trust i.e., First Trust and Vivaldi Merger go up and down completely randomly.
Pair Corralation between First Trust and Vivaldi Merger
Assuming the 90 days horizon First Trust Short is expected to generate 2.4 times more return on investment than Vivaldi Merger. However, First Trust is 2.4 times more volatile than Vivaldi Merger Arbitrage. It trades about 0.33 of its potential returns per unit of risk. Vivaldi Merger Arbitrage is currently generating about 0.22 per unit of risk. If you would invest 1,795 in First Trust Short on August 28, 2024 and sell it today you would earn a total of 18.00 from holding First Trust Short or generate 1.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Short vs. Vivaldi Merger Arbitrage
Performance |
| Timeline |
| First Trust Short |
| Vivaldi Merger Arbitrage |
First Trust and Vivaldi Merger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Vivaldi Merger
The main advantage of trading using opposite First Trust and Vivaldi Merger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Vivaldi Merger 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 Vivaldi Merger will offset losses from the drop in Vivaldi Merger's long position.| First Trust vs. First Trust Managed | First Trust vs. Franklin Templeton Multi Asset | First Trust vs. Vivaldi Merger Arbitrage | First Trust vs. First Trust Merger |
| Vivaldi Merger vs. First Trust Managed | Vivaldi Merger vs. First Trust Short | Vivaldi Merger vs. First Trust Short | Vivaldi Merger vs. First Trustconfluence Small |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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