Correlation Between First Trust and Hartford Total
Can any of the company-specific risk be diversified away by investing in both First Trust and Hartford Total 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 Hartford Total into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust TCW and Hartford Total Return, you can compare the effects of market volatilities on First Trust and Hartford Total 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 Hartford Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Hartford Total.
Diversification Opportunities for First Trust and Hartford Total
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and Hartford is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding First Trust TCW and Hartford Total Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Total Return 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 TCW are associated (or correlated) with Hartford Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Total Return has no effect on the direction of First Trust i.e., First Trust and Hartford Total go up and down completely randomly.
Pair Corralation between First Trust and Hartford Total
Given the investment horizon of 90 days First Trust TCW is expected to generate 1.28 times more return on investment than Hartford Total. However, First Trust is 1.28 times more volatile than Hartford Total Return. It trades about 0.09 of its potential returns per unit of risk. Hartford Total Return is currently generating about 0.08 per unit of risk. If you would invest 4,287 in First Trust TCW on November 2, 2024 and sell it today you would earn a total of 28.00 from holding First Trust TCW or generate 0.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust TCW vs. Hartford Total Return
Performance |
| Timeline |
| First Trust TCW |
| Hartford Total Return |
First Trust and Hartford Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Hartford Total
The main advantage of trading using opposite First Trust and Hartford Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Hartford Total 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 Hartford Total will offset losses from the drop in Hartford Total's long position.| First Trust vs. First Trust Low | First Trust vs. First Trust Enhanced | First Trust vs. First Trust Tactical | First Trust vs. First Trust Managed |
| Hartford Total vs. Invesco Total Return | Hartford Total vs. Hartford Municipal Opportunities | Hartford Total vs. Goldman Sachs Access | Hartford Total vs. First Trust TCW |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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