Correlation Between First Trust and Invesco Raymond
Can any of the company-specific risk be diversified away by investing in both First Trust and Invesco Raymond 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 Raymond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Mid and Invesco Raymond James, you can compare the effects of market volatilities on First Trust and Invesco Raymond 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 Raymond. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Invesco Raymond.
Diversification Opportunities for First Trust and Invesco Raymond
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between First and Invesco is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Mid and Invesco Raymond James in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Raymond James 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 Mid are associated (or correlated) with Invesco Raymond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Raymond James has no effect on the direction of First Trust i.e., First Trust and Invesco Raymond go up and down completely randomly.
Pair Corralation between First Trust and Invesco Raymond
Considering the 90-day investment horizon First Trust Mid is expected to generate 1.16 times more return on investment than Invesco Raymond. However, First Trust is 1.16 times more volatile than Invesco Raymond James. It trades about 0.13 of its potential returns per unit of risk. Invesco Raymond James is currently generating about 0.14 per unit of risk. If you would invest 8,457 in First Trust Mid on August 25, 2024 and sell it today you would earn a total of 4,088 from holding First Trust Mid or generate 48.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 71.22% |
| Values | Daily Returns |
First Trust Mid vs. Invesco Raymond James
Performance |
| Timeline |
| First Trust Mid |
| Invesco Raymond James |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
First Trust and Invesco Raymond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Invesco Raymond
The main advantage of trading using opposite First Trust and Invesco Raymond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Invesco Raymond 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 Raymond will offset losses from the drop in Invesco Raymond's long position.| First Trust vs. First Trust Small | First Trust vs. First Trust Large | First Trust vs. First Trust Large | First Trust vs. First Trust Large |
| Invesco Raymond vs. Invesco SP MidCap | Invesco Raymond vs. Invesco Zacks Mid Cap | Invesco Raymond vs. Invesco SP Spin Off | Invesco Raymond vs. Invesco SP SmallCap |
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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