Correlation Between First Trust and Morgan Creek
Can any of the company-specific risk be diversified away by investing in both First Trust and Morgan Creek 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 Morgan Creek 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 Morgan Creek Capital, you can compare the effects of market volatilities on First Trust and Morgan Creek 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 Morgan Creek. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Morgan Creek.
Diversification Opportunities for First Trust and Morgan Creek
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Morgan is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Mid and Morgan Creek Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Creek Capital 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 Morgan Creek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morgan Creek Capital has no effect on the direction of First Trust i.e., First Trust and Morgan Creek go up and down completely randomly.
Pair Corralation between First Trust and Morgan Creek
If you would invest 6,417 in First Trust Mid on September 4, 2024 and sell it today you would earn a total of 2,336 from holding First Trust Mid or generate 36.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 0.4% |
| Values | Daily Returns |
First Trust Mid vs. Morgan Creek Capital
Performance |
| Timeline |
| First Trust Mid |
| Morgan Creek Capital |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
First Trust and Morgan Creek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Morgan Creek
The main advantage of trading using opposite First Trust and Morgan Creek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Morgan Creek 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 Morgan Creek will offset losses from the drop in Morgan Creek's long position.| First Trust vs. iShares Russell Mid Cap | First Trust vs. iShares SP Mid Cap | First Trust vs. SPDR Kensho New | First Trust vs. iShares Morningstar Mid Cap |
| Morgan Creek vs. First Trust Mid | Morgan Creek vs. First Trust Small | Morgan Creek vs. First Trust Small | Morgan Creek vs. First Trust Mid |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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