Correlation Between First Trust and Invesco Aaa
Can any of the company-specific risk be diversified away by investing in both First Trust and Invesco Aaa 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 Invesco Aaa 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 Invesco Aaa Clo, you can compare the effects of market volatilities on First Trust and Invesco Aaa 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 Invesco Aaa. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Invesco Aaa.
Diversification Opportunities for First Trust and Invesco Aaa
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Invesco is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Senior and Invesco Aaa Clo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Aaa Clo 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 Invesco Aaa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Aaa Clo has no effect on the direction of First Trust i.e., First Trust and Invesco Aaa go up and down completely randomly.
Pair Corralation between First Trust and Invesco Aaa
Given the investment horizon of 90 days First Trust Senior is expected to generate 3.69 times more return on investment than Invesco Aaa. However, First Trust is 3.69 times more volatile than Invesco Aaa Clo. It trades about 0.17 of its potential returns per unit of risk. Invesco Aaa Clo is currently generating about 0.56 per unit of risk. If you would invest 4,599 in First Trust Senior on August 30, 2024 and sell it today you would earn a total of 29.00 from holding First Trust Senior or generate 0.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Senior vs. Invesco Aaa Clo
Performance |
| Timeline |
| First Trust Senior |
| Invesco Aaa Clo |
First Trust and Invesco Aaa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Invesco Aaa
The main advantage of trading using opposite First Trust and Invesco Aaa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Invesco Aaa 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 Invesco Aaa will offset losses from the drop in Invesco Aaa'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 |
| Invesco Aaa vs. Rbb Fund | Invesco Aaa vs. US Treasury 12 | Invesco Aaa vs. Rbb Fund | Invesco Aaa vs. Rbb Fund |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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