Correlation Between First Trust and RBC Quant
Can any of the company-specific risk be diversified away by investing in both First Trust and RBC Quant 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 RBC Quant 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 RBC Quant European, you can compare the effects of market volatilities on First Trust and RBC Quant 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 RBC Quant. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and RBC Quant.
Diversification Opportunities for First Trust and RBC Quant
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and RBC is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Indxx and RBC Quant European in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Quant European 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 RBC Quant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBC Quant European has no effect on the direction of First Trust i.e., First Trust and RBC Quant go up and down completely randomly.
Pair Corralation between First Trust and RBC Quant
Assuming the 90 days trading horizon First Trust Indxx is expected to generate 0.91 times more return on investment than RBC Quant. However, First Trust Indxx is 1.1 times less risky than RBC Quant. It trades about 0.12 of its potential returns per unit of risk. RBC Quant European is currently generating about 0.07 per unit of risk. If you would invest 798.00 in First Trust Indxx on September 3, 2024 and sell it today you would earn a total of 355.00 from holding First Trust Indxx or generate 44.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
First Trust Indxx vs. RBC Quant European
Performance |
| Timeline |
| First Trust Indxx |
| RBC Quant European |
First Trust and RBC Quant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and RBC Quant
The main advantage of trading using opposite First Trust and RBC Quant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, RBC Quant 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 RBC Quant will offset losses from the drop in RBC Quant's long position.| First Trust vs. International Zeolite Corp | First Trust vs. European Residential Real | First Trust vs. Financial 15 Split | First Trust vs. Rubicon Organics |
| RBC Quant vs. RBC Quant EAFE | RBC Quant vs. RBC Quant Dividend | RBC Quant vs. RBC Quant Emerging | RBC Quant vs. RBC Quant Canadian |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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