Correlation Between First Trust and Boulder Growth
Can any of the company-specific risk be diversified away by investing in both First Trust and Boulder Growth 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 Boulder Growth 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 Boulder Growth Income, you can compare the effects of market volatilities on First Trust and Boulder Growth 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 Boulder Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Boulder Growth.
Diversification Opportunities for First Trust and Boulder Growth
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between First and Boulder is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Specialty and Boulder Growth Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boulder Growth 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 Boulder Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boulder Growth Income has no effect on the direction of First Trust i.e., First Trust and Boulder Growth go up and down completely randomly.
Pair Corralation between First Trust and Boulder Growth
Considering the 90-day investment horizon First Trust Specialty is expected to generate 1.65 times more return on investment than Boulder Growth. However, First Trust is 1.65 times more volatile than Boulder Growth Income. It trades about 0.09 of its potential returns per unit of risk. Boulder Growth Income is currently generating about 0.09 per unit of risk. If you would invest 253.00 in First Trust Specialty on September 12, 2024 and sell it today you would earn a total of 173.00 from holding First Trust Specialty or generate 68.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
First Trust Specialty vs. Boulder Growth Income
Performance |
| Timeline |
| First Trust Specialty |
| Boulder Growth Income |
First Trust and Boulder Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Boulder Growth
The main advantage of trading using opposite First Trust and Boulder Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Boulder Growth 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 Boulder Growth will offset losses from the drop in Boulder Growth'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 |
| Boulder Growth vs. Blackrock Moderate Prepared | Boulder Growth vs. Wilmington Trust Retirement | Boulder Growth vs. Jp Morgan Smartretirement | Boulder Growth vs. Strategic Allocation Moderate |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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