Correlation Between First Trust and SonicShares Global
Can any of the company-specific risk be diversified away by investing in both First Trust and SonicShares Global 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 SonicShares Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Nasdaq and SonicShares Global Shipping, you can compare the effects of market volatilities on First Trust and SonicShares Global 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 SonicShares Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and SonicShares Global.
Diversification Opportunities for First Trust and SonicShares Global
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and SonicShares is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Nasdaq and SonicShares Global Shipping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SonicShares Global 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 Nasdaq are associated (or correlated) with SonicShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SonicShares Global has no effect on the direction of First Trust i.e., First Trust and SonicShares Global go up and down completely randomly.
Pair Corralation between First Trust and SonicShares Global
Given the investment horizon of 90 days First Trust Nasdaq is expected to generate 1.24 times more return on investment than SonicShares Global. However, First Trust is 1.24 times more volatile than SonicShares Global Shipping. It trades about 0.23 of its potential returns per unit of risk. SonicShares Global Shipping is currently generating about -0.15 per unit of risk. If you would invest 3,343 in First Trust Nasdaq on August 29, 2024 and sell it today you would earn a total of 310.00 from holding First Trust Nasdaq or generate 9.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Nasdaq vs. SonicShares Global Shipping
Performance |
| Timeline |
| First Trust Nasdaq |
| SonicShares Global |
First Trust and SonicShares Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and SonicShares Global
The main advantage of trading using opposite First Trust and SonicShares Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, SonicShares Global 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 SonicShares Global will offset losses from the drop in SonicShares Global's long position.| First Trust vs. First Trust Nasdaq | First Trust vs. First Trust Nasdaq | First Trust vs. First Trust Nasdaq | First Trust vs. First Trust Nasdaq |
| SonicShares Global vs. Breakwave Dry Bulk | SonicShares Global vs. US Global Sea | SonicShares Global vs. Defiance Hotel Airline | SonicShares Global vs. First Trust Nasdaq |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |