Correlation Between First Trust and Clearbridge Energy
Can any of the company-specific risk be diversified away by investing in both First Trust and Clearbridge Energy 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 Clearbridge Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust High and Clearbridge Energy Mlp, you can compare the effects of market volatilities on First Trust and Clearbridge Energy 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 Clearbridge Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Clearbridge Energy.
Diversification Opportunities for First Trust and Clearbridge Energy
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and Clearbridge is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding First Trust High and Clearbridge Energy Mlp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge Energy Mlp 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 High are associated (or correlated) with Clearbridge Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge Energy Mlp has no effect on the direction of First Trust i.e., First Trust and Clearbridge Energy go up and down completely randomly.
Pair Corralation between First Trust and Clearbridge Energy
If you would invest 1,461 in First Trust High on August 28, 2024 and sell it today you would earn a total of 21.00 from holding First Trust High or generate 1.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.55% |
| Values | Daily Returns |
First Trust High vs. Clearbridge Energy Mlp
Performance |
| Timeline |
| First Trust High |
| Clearbridge Energy Mlp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Strong
First Trust and Clearbridge Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Clearbridge Energy
The main advantage of trading using opposite First Trust and Clearbridge Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Clearbridge Energy 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 Clearbridge Energy will offset losses from the drop in Clearbridge Energy's long position.| First Trust vs. Invesco High Income | First Trust vs. MFS Investment Grade | First Trust vs. Eaton Vance National | First Trust vs. DTF Tax Free |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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