Correlation Between First Trust and Nuveen Preferred
Can any of the company-specific risk be diversified away by investing in both First Trust and Nuveen Preferred 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 Nuveen Preferred into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Intermediate and Nuveen Preferred And, you can compare the effects of market volatilities on First Trust and Nuveen Preferred 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 Nuveen Preferred. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Nuveen Preferred.
Diversification Opportunities for First Trust and Nuveen Preferred
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and Nuveen is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Intermediate and Nuveen Preferred And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Preferred And 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 Intermediate are associated (or correlated) with Nuveen Preferred. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Preferred And has no effect on the direction of First Trust i.e., First Trust and Nuveen Preferred go up and down completely randomly.
Pair Corralation between First Trust and Nuveen Preferred
Considering the 90-day investment horizon First Trust Intermediate is expected to generate 0.87 times more return on investment than Nuveen Preferred. However, First Trust Intermediate is 1.14 times less risky than Nuveen Preferred. It trades about 0.05 of its potential returns per unit of risk. Nuveen Preferred And is currently generating about -0.04 per unit of risk. If you would invest 1,487 in First Trust Intermediate on August 28, 2024 and sell it today you would earn a total of 394.00 from holding First Trust Intermediate or generate 26.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 31.52% |
| Values | Daily Returns |
First Trust Intermediate vs. Nuveen Preferred And
Performance |
| Timeline |
| First Trust Intermediate |
| Nuveen Preferred And |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
First Trust and Nuveen Preferred Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Nuveen Preferred
The main advantage of trading using opposite First Trust and Nuveen Preferred positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Nuveen Preferred 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 Nuveen Preferred will offset losses from the drop in Nuveen Preferred's long position.| First Trust vs. RiverNorth Flexible Municipalome | First Trust vs. DWS Municipal Income | First Trust vs. Blackrock Munivest | First Trust vs. MFS Municipal Income |
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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