Correlation Between First Trust and Calvert Global
Can any of the company-specific risk be diversified away by investing in both First Trust and Calvert Global 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 Calvert Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Water and Calvert Global Water, you can compare the effects of market volatilities on First Trust and Calvert Global 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 Calvert Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Calvert Global.
Diversification Opportunities for First Trust and Calvert Global
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and Calvert is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Water and Calvert Global Water in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calvert Global Water 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 Water are associated (or correlated) with Calvert Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calvert Global Water has no effect on the direction of First Trust i.e., First Trust and Calvert Global go up and down completely randomly.
Pair Corralation between First Trust and Calvert Global
Considering the 90-day investment horizon First Trust Water is expected to generate 1.21 times more return on investment than Calvert Global. However, First Trust is 1.21 times more volatile than Calvert Global Water. It trades about 0.05 of its potential returns per unit of risk. Calvert Global Water is currently generating about 0.05 per unit of risk. If you would invest 10,327 in First Trust Water on September 3, 2024 and sell it today you would earn a total of 706.00 from holding First Trust Water or generate 6.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Water vs. Calvert Global Water
Performance |
| Timeline |
| First Trust Water |
| Calvert Global Water |
First Trust and Calvert Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Calvert Global
The main advantage of trading using opposite First Trust and Calvert Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Calvert Global 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 Calvert Global will offset losses from the drop in Calvert Global's long position.| First Trust vs. Invesco SP Global | First Trust vs. Invesco Global Water | First Trust vs. Invesco Water Resources | First Trust vs. First Trust NASDAQ |
| Calvert Global vs. Calvert Global Water | Calvert Global vs. Calvert Global Water | Calvert Global vs. Calvert Large Cap | Calvert Global vs. Calvert Global 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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