Correlation Between First Trust and Buffalo Dividend
Can any of the company-specific risk be diversified away by investing in both First Trust and Buffalo Dividend 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 Buffalo Dividend 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 Buffalo Dividend Focus, you can compare the effects of market volatilities on First Trust and Buffalo Dividend 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 Buffalo Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Buffalo Dividend.
Diversification Opportunities for First Trust and Buffalo Dividend
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between First and Buffalo is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Specialty and Buffalo Dividend Focus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Buffalo Dividend Focus 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 Buffalo Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Buffalo Dividend Focus has no effect on the direction of First Trust i.e., First Trust and Buffalo Dividend go up and down completely randomly.
Pair Corralation between First Trust and Buffalo Dividend
Considering the 90-day investment horizon First Trust Specialty is expected to generate 1.68 times more return on investment than Buffalo Dividend. However, First Trust is 1.68 times more volatile than Buffalo Dividend Focus. It trades about 0.1 of its potential returns per unit of risk. Buffalo Dividend Focus is currently generating about 0.17 per unit of risk. If you would invest 370.00 in First Trust Specialty on September 1, 2024 and sell it today you would earn a total of 58.00 from holding First Trust Specialty or generate 15.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
First Trust Specialty vs. Buffalo Dividend Focus
Performance |
| Timeline |
| First Trust Specialty |
| Buffalo Dividend Focus |
First Trust and Buffalo Dividend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Buffalo Dividend
The main advantage of trading using opposite First Trust and Buffalo Dividend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Buffalo Dividend 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 Buffalo Dividend will offset losses from the drop in Buffalo Dividend's 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 |
| Buffalo Dividend vs. Buffalo Emerging Opportunities | Buffalo Dividend vs. Buffalo Discovery Fund | Buffalo Dividend vs. Buffalo International Fund | Buffalo Dividend vs. Buffalo Large Cap |
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.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Transaction History View history of all your transactions and understand their impact on performance |