Correlation Between First Trust and ValOre Metals
Can any of the company-specific risk be diversified away by investing in both First Trust and ValOre Metals 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 ValOre Metals 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 ValOre Metals Corp, you can compare the effects of market volatilities on First Trust and ValOre Metals 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 ValOre Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and ValOre Metals.
Diversification Opportunities for First Trust and ValOre Metals
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between First and ValOre is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Indxx and ValOre Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ValOre Metals Corp 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 ValOre Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ValOre Metals Corp has no effect on the direction of First Trust i.e., First Trust and ValOre Metals go up and down completely randomly.
Pair Corralation between First Trust and ValOre Metals
Assuming the 90 days trading horizon First Trust Indxx is expected to generate 0.04 times more return on investment than ValOre Metals. However, First Trust Indxx is 25.55 times less risky than ValOre Metals. It trades about -0.21 of its potential returns per unit of risk. ValOre Metals Corp is currently generating about -0.21 per unit of risk. If you would invest 1,166 in First Trust Indxx on August 31, 2024 and sell it today you would lose (13.00) from holding First Trust Indxx or give up 1.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Indxx vs. ValOre Metals Corp
Performance |
| Timeline |
| First Trust Indxx |
| ValOre Metals Corp |
First Trust and ValOre Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and ValOre Metals
The main advantage of trading using opposite First Trust and ValOre Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, ValOre Metals 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 ValOre Metals will offset losses from the drop in ValOre Metals' long position.| First Trust vs. iShares Canadian HYBrid | First Trust vs. Brompton European Dividend | First Trust vs. Solar Alliance Energy | First Trust vs. PHN Multi Style All Cap |
| ValOre Metals vs. Forum Energy Metals | ValOre Metals vs. iShares Canadian HYBrid | ValOre Metals vs. Brompton European Dividend | ValOre Metals vs. Solar Alliance Energy |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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