Correlation Between First Trust and Ned Davis
Can any of the company-specific risk be diversified away by investing in both First Trust and Ned Davis 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 Ned Davis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Multi Asset and Ned Davis Research, you can compare the effects of market volatilities on First Trust and Ned Davis 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 Ned Davis. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Ned Davis.
Diversification Opportunities for First Trust and Ned Davis
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and Ned is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Multi Asset and Ned Davis Research in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ned Davis Research 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 Multi Asset are associated (or correlated) with Ned Davis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ned Davis Research has no effect on the direction of First Trust i.e., First Trust and Ned Davis go up and down completely randomly.
Pair Corralation between First Trust and Ned Davis
Given the investment horizon of 90 days First Trust Multi Asset is expected to generate 0.67 times more return on investment than Ned Davis. However, First Trust Multi Asset is 1.49 times less risky than Ned Davis. It trades about 0.51 of its potential returns per unit of risk. Ned Davis Research is currently generating about 0.28 per unit of risk. If you would invest 1,630 in First Trust Multi Asset on September 3, 2024 and sell it today you would earn a total of 64.00 from holding First Trust Multi Asset or generate 3.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Multi Asset vs. Ned Davis Research
Performance |
| Timeline |
| First Trust Multi |
| Ned Davis Research |
First Trust and Ned Davis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Ned Davis
The main advantage of trading using opposite First Trust and Ned Davis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Ned Davis 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 Ned Davis will offset losses from the drop in Ned Davis' long position.| First Trust vs. Global X SuperIncome | First Trust vs. iShares Morningstar Multi Asset | First Trust vs. Invesco CEF Income | First Trust vs. VanEck Fallen Angel |
| Ned Davis vs. First Trust Multi Asset | Ned Davis vs. Collaborative Investment Series | Ned Davis vs. EA Series Trust | Ned Davis vs. Ocean Park International |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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