Correlation Between First Trust and Ab Equity
Can any of the company-specific risk be diversified away by investing in both First Trust and Ab Equity 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 Ab Equity 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 Ab Equity Income, you can compare the effects of market volatilities on First Trust and Ab Equity 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 Ab Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Ab Equity.
Diversification Opportunities for First Trust and Ab Equity
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and AUIAX is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Specialty and Ab Equity Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Equity Income 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 Ab Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Equity Income has no effect on the direction of First Trust i.e., First Trust and Ab Equity go up and down completely randomly.
Pair Corralation between First Trust and Ab Equity
Considering the 90-day investment horizon First Trust Specialty is expected to generate 1.67 times more return on investment than Ab Equity. However, First Trust is 1.67 times more volatile than Ab Equity Income. It trades about 0.18 of its potential returns per unit of risk. Ab Equity Income is currently generating about 0.2 per unit of risk. If you would invest 425.00 in First Trust Specialty on October 25, 2024 and sell it today you would earn a total of 16.00 from holding First Trust Specialty or generate 3.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Specialty vs. Ab Equity Income
Performance |
| Timeline |
| First Trust Specialty |
| Ab Equity Income |
First Trust and Ab Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Ab Equity
The main advantage of trading using opposite First Trust and Ab Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Ab Equity 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 Ab Equity will offset losses from the drop in Ab Equity's long position.| First Trust vs. Munivest Fund | First Trust vs. MFS High Income | First Trust vs. Franklin Templeton Limited | First Trust vs. MFS Investment Grade |
| Ab Equity vs. First Trust Specialty | Ab Equity vs. Blackstone Secured Lending | Ab Equity vs. Pimco Capital Sec | Ab Equity vs. Prudential Financial Services |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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