Correlation Between First Trust and TTM Technologies
Can any of the company-specific risk be diversified away by investing in both First Trust and TTM Technologies 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 TTM Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Flexible and TTM Technologies, you can compare the effects of market volatilities on First Trust and TTM Technologies 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 TTM Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and TTM Technologies.
Diversification Opportunities for First Trust and TTM Technologies
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and TTM is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Flexible and TTM Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TTM Technologies 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 Flexible are associated (or correlated) with TTM Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TTM Technologies has no effect on the direction of First Trust i.e., First Trust and TTM Technologies go up and down completely randomly.
Pair Corralation between First Trust and TTM Technologies
Given the investment horizon of 90 days First Trust is expected to generate 6.27 times less return on investment than TTM Technologies. But when comparing it to its historical volatility, First Trust Flexible is 3.18 times less risky than TTM Technologies. It trades about 0.04 of its potential returns per unit of risk. TTM Technologies is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,327 in TTM Technologies on August 24, 2024 and sell it today you would earn a total of 1,073 from holding TTM Technologies or generate 80.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Flexible vs. TTM Technologies
Performance |
| Timeline |
| First Trust Flexible |
| TTM Technologies |
First Trust and TTM Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and TTM Technologies
The main advantage of trading using opposite First Trust and TTM Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, TTM Technologies 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 TTM Technologies will offset losses from the drop in TTM Technologies' long position.| First Trust vs. Fundamental Income Net | First Trust vs. TTM Technologies | First Trust vs. DXP Enterprises | First Trust vs. Citi Trends |
| TTM Technologies vs. Sanmina | TTM Technologies vs. Benchmark Electronics | TTM Technologies vs. Methode Electronics | TTM Technologies vs. OSI Systems |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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