Correlation Between Forstrong Global and First Trust
Can any of the company-specific risk be diversified away by investing in both Forstrong Global and First Trust 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 Forstrong Global and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Forstrong Global Income and First Trust Nasdaq, you can compare the effects of market volatilities on Forstrong Global and First Trust 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 Forstrong Global with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forstrong Global and First Trust.
Diversification Opportunities for Forstrong Global and First Trust
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Forstrong and First is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Forstrong Global Income and First Trust Nasdaq in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Nasdaq and Forstrong Global 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 Forstrong Global Income are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Nasdaq has no effect on the direction of Forstrong Global i.e., Forstrong Global and First Trust go up and down completely randomly.
Pair Corralation between Forstrong Global and First Trust
Assuming the 90 days trading horizon Forstrong Global Income is expected to generate 0.21 times more return on investment than First Trust. However, Forstrong Global Income is 4.71 times less risky than First Trust. It trades about 0.13 of its potential returns per unit of risk. First Trust Nasdaq is currently generating about -0.01 per unit of risk. If you would invest 2,035 in Forstrong Global Income on September 1, 2024 and sell it today you would earn a total of 127.00 from holding Forstrong Global Income or generate 6.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Forstrong Global Income vs. First Trust Nasdaq
Performance |
| Timeline |
| Forstrong Global Income |
| First Trust Nasdaq |
Forstrong Global and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Forstrong Global and First Trust
The main advantage of trading using opposite Forstrong Global and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Forstrong Global position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| Forstrong Global vs. iShares SPTSX 60 | Forstrong Global vs. iShares Core SP | Forstrong Global vs. iShares Core SPTSX | Forstrong Global vs. BMO Aggregate Bond |
| First Trust vs. Forstrong Global Income | First Trust vs. BMO Aggregate Bond | First Trust vs. iShares Canadian HYBrid | First Trust vs. Brompton European Dividend |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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