Correlation Between First Trust and Exemplar Growth
Can any of the company-specific risk be diversified away by investing in both First Trust and Exemplar Growth 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 Exemplar Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Senior and Exemplar Growth and, you can compare the effects of market volatilities on First Trust and Exemplar Growth 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 Exemplar Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Exemplar Growth.
Diversification Opportunities for First Trust and Exemplar Growth
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between First and Exemplar is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Senior and Exemplar Growth and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exemplar Growth 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 Senior are associated (or correlated) with Exemplar Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exemplar Growth has no effect on the direction of First Trust i.e., First Trust and Exemplar Growth go up and down completely randomly.
Pair Corralation between First Trust and Exemplar Growth
Assuming the 90 days trading horizon First Trust is expected to generate 2.07 times less return on investment than Exemplar Growth. But when comparing it to its historical volatility, First Trust Senior is 1.71 times less risky than Exemplar Growth. It trades about 0.18 of its potential returns per unit of risk. Exemplar Growth and is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 2,256 in Exemplar Growth and on November 3, 2024 and sell it today you would earn a total of 32.00 from holding Exemplar Growth and or generate 1.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
First Trust Senior vs. Exemplar Growth and
Performance |
| Timeline |
| First Trust Senior |
| Exemplar Growth |
First Trust and Exemplar Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Exemplar Growth
The main advantage of trading using opposite First Trust and Exemplar Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Exemplar Growth 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 Exemplar Growth will offset losses from the drop in Exemplar Growth's long position.| First Trust vs. First Trust Global | First Trust vs. FT AlphaDEX Industrials | First Trust vs. First Trust Value | First Trust vs. Global X Active |
| Exemplar Growth vs. Brompton Flaherty Crumrine | Exemplar Growth vs. Evolve Active Canadian | Exemplar Growth vs. First Trust Global | Exemplar Growth vs. First Trust Senior |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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