Correlation Between First Trust and High Liner

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both First Trust and High Liner 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 High Liner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Indxx and High Liner Foods, you can compare the effects of market volatilities on First Trust and High Liner 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 High Liner. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and High Liner.

Diversification Opportunities for First Trust and High Liner

0.27
  Correlation Coefficient

Modest diversification

The 3 months correlation between First and High is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Indxx and High Liner Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Liner Foods 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 Indxx are associated (or correlated) with High Liner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Liner Foods has no effect on the direction of First Trust i.e., First Trust and High Liner go up and down completely randomly.

Pair Corralation between First Trust and High Liner

Assuming the 90 days trading horizon First Trust is expected to generate 5.88 times less return on investment than High Liner. But when comparing it to its historical volatility, First Trust Indxx is 4.47 times less risky than High Liner. It trades about 0.16 of its potential returns per unit of risk. High Liner Foods is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  1,296  in High Liner Foods on September 12, 2024 and sell it today you would earn a total of  282.00  from holding High Liner Foods or generate 21.76% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

First Trust Indxx  vs.  High Liner Foods

 Performance 
       Timeline  
First Trust Indxx 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Indxx are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, First Trust is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.
High Liner Foods 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in High Liner Foods are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, High Liner displayed solid returns over the last few months and may actually be approaching a breakup point.

First Trust and High Liner Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with First Trust and High Liner

The main advantage of trading using opposite First Trust and High Liner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, High Liner 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 High Liner will offset losses from the drop in High Liner's long position.
The idea behind First Trust Indxx and High Liner Foods pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.

Other Complementary Tools

Equity Analysis
Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities
Global Markets Map
Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes
Equity Search
Search for actively traded equities including funds and ETFs from over 30 global markets
Instant Ratings
Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance
Fundamentals Comparison
Compare fundamentals across multiple equities to find investing opportunities