Correlation Between KBUY and First Trust
Can any of the company-specific risk be diversified away by investing in both KBUY and First Trust 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 KBUY and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KBUY and First Trust Emerging, you can compare the effects of market volatilities on KBUY and First Trust 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 KBUY with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of KBUY and First Trust.
Diversification Opportunities for KBUY and First Trust
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KBUY and First is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding KBUY and First Trust Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Emerging and KBUY 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 KBUY are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Emerging has no effect on the direction of KBUY i.e., KBUY and First Trust go up and down completely randomly.
Pair Corralation between KBUY and First Trust
If you would invest 2,674 in First Trust Emerging on September 4, 2024 and sell it today you would earn a total of 21.00 from holding First Trust Emerging or generate 0.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 0.4% |
| Values | Daily Returns |
KBUY vs. First Trust Emerging
Performance |
| Timeline |
| KBUY |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| First Trust Emerging |
KBUY and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KBUY and First Trust
The main advantage of trading using opposite KBUY and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KBUY position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| KBUY vs. Franklin FTSE South | KBUY vs. Franklin FTSE Japan | KBUY vs. Franklin FTSE India | KBUY vs. Franklin FTSE Brazil |
| First Trust vs. First Trust SSI | First Trust vs. First Trust BuyWrite | First Trust vs. First Trust Managed | First Trust 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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