Correlation Between First Trust and Panagram Bbb
Can any of the company-specific risk be diversified away by investing in both First Trust and Panagram Bbb 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 Panagram Bbb 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 Panagram Bbb B Clo, you can compare the effects of market volatilities on First Trust and Panagram Bbb 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 Panagram Bbb. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Panagram Bbb.
Diversification Opportunities for First Trust and Panagram Bbb
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and Panagram is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Senior and Panagram Bbb B Clo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Panagram Bbb B 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 Panagram Bbb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Panagram Bbb B has no effect on the direction of First Trust i.e., First Trust and Panagram Bbb go up and down completely randomly.
Pair Corralation between First Trust and Panagram Bbb
Given the investment horizon of 90 days First Trust is expected to generate 1.45 times less return on investment than Panagram Bbb. But when comparing it to its historical volatility, First Trust Senior is 1.05 times less risky than Panagram Bbb. It trades about 0.26 of its potential returns per unit of risk. Panagram Bbb B Clo is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 2,402 in Panagram Bbb B Clo on August 26, 2024 and sell it today you would earn a total of 304.00 from holding Panagram Bbb B Clo or generate 12.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Senior vs. Panagram Bbb B Clo
Performance |
| Timeline |
| First Trust Senior |
| Panagram Bbb B |
First Trust and Panagram Bbb Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Panagram Bbb
The main advantage of trading using opposite First Trust and Panagram Bbb positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Panagram Bbb 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 Panagram Bbb will offset losses from the drop in Panagram Bbb's long position.| First Trust vs. First Trust Tactical | First Trust vs. First Trust Low | First Trust vs. First Trust Enhanced | First Trust vs. First Trust Managed |
| Panagram Bbb vs. First Trust Low | Panagram Bbb vs. First Trust Senior | Panagram Bbb vs. First Trust TCW | Panagram Bbb vs. First Trust Tactical |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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