Correlation Between First Trust and Promotora
Can any of the company-specific risk be diversified away by investing in both First Trust and Promotora 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 Promotora into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Exchange Traded and Promotora y Operadora, you can compare the effects of market volatilities on First Trust and Promotora 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 Promotora. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Promotora.
Diversification Opportunities for First Trust and Promotora
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and Promotora is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Exchange Traded and Promotora y Operadora in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Promotora y Operadora 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 Exchange Traded are associated (or correlated) with Promotora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Promotora y Operadora has no effect on the direction of First Trust i.e., First Trust and Promotora go up and down completely randomly.
Pair Corralation between First Trust and Promotora
Assuming the 90 days trading horizon First Trust Exchange Traded is expected to generate 0.77 times more return on investment than Promotora. However, First Trust Exchange Traded is 1.3 times less risky than Promotora. It trades about 0.13 of its potential returns per unit of risk. Promotora y Operadora is currently generating about 0.03 per unit of risk. If you would invest 272,700 in First Trust Exchange Traded on September 1, 2024 and sell it today you would earn a total of 233,000 from holding First Trust Exchange Traded or generate 85.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Exchange Traded vs. Promotora y Operadora
Performance |
| Timeline |
| First Trust Exchange |
| Promotora y Operadora |
First Trust and Promotora Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Promotora
The main advantage of trading using opposite First Trust and Promotora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Promotora 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 Promotora will offset losses from the drop in Promotora's long position.| First Trust vs. First Trust Developed | First Trust vs. First Trust Germany | First Trust vs. First Trust Exchange Traded | First Trust vs. First Trust Dow |
| Promotora vs. Gruma SAB de | Promotora vs. Grupo Aeroportuario del | Promotora vs. Grupo Aeroportuario del | Promotora vs. Grupo Aeroportuario del |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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