Correlation Between First Trust and Aggressive Investors
Can any of the company-specific risk be diversified away by investing in both First Trust and Aggressive Investors 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 Aggressive Investors 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 Aggressive Investors 1, you can compare the effects of market volatilities on First Trust and Aggressive Investors 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 Aggressive Investors. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Aggressive Investors.
Diversification Opportunities for First Trust and Aggressive Investors
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between First and Aggressive is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Specialty and Aggressive Investors 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aggressive Investors 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 Aggressive Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aggressive Investors has no effect on the direction of First Trust i.e., First Trust and Aggressive Investors go up and down completely randomly.
Pair Corralation between First Trust and Aggressive Investors
Considering the 90-day investment horizon First Trust Specialty is expected to generate 1.12 times more return on investment than Aggressive Investors. However, First Trust is 1.12 times more volatile than Aggressive Investors 1. It trades about 0.08 of its potential returns per unit of risk. Aggressive Investors 1 is currently generating about -0.02 per unit of risk. If you would invest 440.00 in First Trust Specialty on November 27, 2024 and sell it today you would earn a total of 8.00 from holding First Trust Specialty or generate 1.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Specialty vs. Aggressive Investors 1
Performance |
| Timeline |
| First Trust Specialty |
| Aggressive Investors |
First Trust and Aggressive Investors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Aggressive Investors
The main advantage of trading using opposite First Trust and Aggressive Investors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Aggressive Investors 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 Aggressive Investors will offset losses from the drop in Aggressive Investors' long position.| First Trust vs. MFS High Income | First Trust vs. MFS High Yield | First Trust vs. Blackrock Muniholdings Quality | First Trust vs. MFS Government Markets |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
Other Complementary Tools
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |