Correlation Between First Trust and First American
Can any of the company-specific risk be diversified away by investing in both First Trust and First American 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 First American 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 First American Funds, you can compare the effects of market volatilities on First Trust and First American 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 First American. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and First American.
Diversification Opportunities for First Trust and First American
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between First and First is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Short and First American Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First American Funds 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 First American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First American Funds has no effect on the direction of First Trust i.e., First Trust and First American go up and down completely randomly.
Pair Corralation between First Trust and First American
If you would invest 311.00 in First American Funds on September 3, 2024 and sell it today you would lose (211.00) from holding First American Funds or give up 67.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
First Trust Short vs. First American Funds
Performance |
| Timeline |
| First Trust Short |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
| First American Funds |
First Trust and First American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and First American
The main advantage of trading using opposite First Trust and First American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, First American 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 American will offset losses from the drop in First American's long position.| First Trust vs. Huber Capital Diversified | First Trust vs. Evaluator Conservative Rms | First Trust vs. Oppenheimer International Diversified | First Trust vs. Prudential Core Conservative |
| First American vs. Vanguard Total Stock | First American vs. Vanguard 500 Index | First American vs. Vanguard Total Stock | First American vs. Vanguard Total Stock |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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