Correlation Between First Trust and Archer Balanced
Can any of the company-specific risk be diversified away by investing in both First Trust and Archer Balanced 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 Archer Balanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Specialty and Archer Balanced Fund, you can compare the effects of market volatilities on First Trust and Archer Balanced 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 Archer Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Archer Balanced.
Diversification Opportunities for First Trust and Archer Balanced
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Archer is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Specialty and Archer Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archer Balanced 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 Specialty are associated (or correlated) with Archer Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Archer Balanced has no effect on the direction of First Trust i.e., First Trust and Archer Balanced go up and down completely randomly.
Pair Corralation between First Trust and Archer Balanced
Considering the 90-day investment horizon First Trust Specialty is expected to generate 2.43 times more return on investment than Archer Balanced. However, First Trust is 2.43 times more volatile than Archer Balanced Fund. It trades about 0.11 of its potential returns per unit of risk. Archer Balanced Fund is currently generating about 0.11 per unit of risk. If you would invest 266.00 in First Trust Specialty on August 31, 2024 and sell it today you would earn a total of 162.00 from holding First Trust Specialty or generate 60.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.73% |
| Values | Daily Returns |
First Trust Specialty vs. Archer Balanced Fund
Performance |
| Timeline |
| First Trust Specialty |
| Archer Balanced |
First Trust and Archer Balanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Archer Balanced
The main advantage of trading using opposite First Trust and Archer Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Archer Balanced 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 Archer Balanced will offset losses from the drop in Archer Balanced's long position.| First Trust vs. MFS Investment Grade | First Trust vs. Eaton Vance Municipal | First Trust vs. DTF Tax Free | First Trust vs. HUMANA INC |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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