Correlation Between First Trust and RBC Target
Can any of the company-specific risk be diversified away by investing in both First Trust and RBC Target 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 RBC Target 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 RBC Target 2029, you can compare the effects of market volatilities on First Trust and RBC Target 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 RBC Target. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and RBC Target.
Diversification Opportunities for First Trust and RBC Target
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between First and RBC is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Senior and RBC Target 2029 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Target 2029 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 RBC Target. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBC Target 2029 has no effect on the direction of First Trust i.e., First Trust and RBC Target go up and down completely randomly.
Pair Corralation between First Trust and RBC Target
Assuming the 90 days trading horizon First Trust Senior is expected to generate 4.33 times more return on investment than RBC Target. However, First Trust is 4.33 times more volatile than RBC Target 2029. It trades about 0.07 of its potential returns per unit of risk. RBC Target 2029 is currently generating about -0.16 per unit of risk. If you would invest 1,687 in First Trust Senior on August 25, 2024 and sell it today you would earn a total of 22.00 from holding First Trust Senior or generate 1.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Senior vs. RBC Target 2029
Performance |
| Timeline |
| First Trust Senior |
| RBC Target 2029 |
First Trust and RBC Target Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and RBC Target
The main advantage of trading using opposite First Trust and RBC Target positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, RBC Target 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 RBC Target will offset losses from the drop in RBC Target'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 |
| RBC Target vs. Franklin Global Aggregate | RBC Target vs. Franklin Large Cap | RBC Target vs. First Trust Senior | RBC Target vs. BMO Aggregate Bond |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |