Correlation Between First Trust and Invesco Aaa
Can any of the company-specific risk be diversified away by investing in both First Trust and Invesco Aaa 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 Invesco Aaa 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 Invesco Aaa Clo, you can compare the effects of market volatilities on First Trust and Invesco Aaa 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 Invesco Aaa. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Invesco Aaa.
Diversification Opportunities for First Trust and Invesco Aaa
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between First and Invesco is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding First Trust TCW and Invesco Aaa Clo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Aaa Clo 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 Invesco Aaa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Aaa Clo has no effect on the direction of First Trust i.e., First Trust and Invesco Aaa go up and down completely randomly.
Pair Corralation between First Trust and Invesco Aaa
Given the investment horizon of 90 days First Trust TCW is expected to under-perform the Invesco Aaa. In addition to that, First Trust is 7.52 times more volatile than Invesco Aaa Clo. It trades about -0.15 of its total potential returns per unit of risk. Invesco Aaa Clo is currently generating about 0.5 per unit of volatility. If you would invest 2,548 in Invesco Aaa Clo on August 26, 2024 and sell it today you would earn a total of 13.00 from holding Invesco Aaa Clo or generate 0.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust TCW vs. Invesco Aaa Clo
Performance |
| Timeline |
| First Trust TCW |
| Invesco Aaa Clo |
First Trust and Invesco Aaa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Invesco Aaa
The main advantage of trading using opposite First Trust and Invesco Aaa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Invesco Aaa 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 Invesco Aaa will offset losses from the drop in Invesco Aaa'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 |
| Invesco Aaa vs. First Trust Low | Invesco Aaa vs. First Trust Senior | Invesco Aaa vs. First Trust TCW | Invesco Aaa vs. First Trust Tactical |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios |