Correlation Between First Trust and Invesco High
Can any of the company-specific risk be diversified away by investing in both First Trust and Invesco High 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 Invesco High 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 Invesco High Income, you can compare the effects of market volatilities on First Trust and Invesco High 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 Invesco High. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Invesco High.
Diversification Opportunities for First Trust and Invesco High
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and Invesco is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Specialty and Invesco High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco High 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 Invesco High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco High Income has no effect on the direction of First Trust i.e., First Trust and Invesco High go up and down completely randomly.
Pair Corralation between First Trust and Invesco High
Considering the 90-day investment horizon First Trust Specialty is expected to generate 1.32 times more return on investment than Invesco High. However, First Trust is 1.32 times more volatile than Invesco High Income. It trades about 0.1 of its potential returns per unit of risk. Invesco High Income is currently generating about -0.07 per unit of risk. If you would invest 417.00 in First Trust Specialty on August 24, 2024 and sell it today you would earn a total of 6.00 from holding First Trust Specialty or generate 1.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
First Trust Specialty vs. Invesco High Income
Performance |
| Timeline |
| First Trust Specialty |
| Invesco High Income |
First Trust and Invesco High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Invesco High
The main advantage of trading using opposite First Trust and Invesco High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Invesco High 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 Invesco High will offset losses from the drop in Invesco High's long position.| First Trust vs. MFS Investment Grade | First Trust vs. Eaton Vance National | First Trust vs. Blackrock Muniyield Quality | First Trust vs. Munivest Fund |
| Invesco High vs. Pioneer Floating Rate | Invesco High vs. Franklin Templeton Limited | Invesco High vs. Western Asset Global | Invesco High vs. Millerhoward High Income |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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