Correlation Between FIRST TRUST and Edinburgh Worldwide
Can any of the company-specific risk be diversified away by investing in both FIRST TRUST and Edinburgh Worldwide 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 Edinburgh Worldwide into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FIRST TRUST GLOBAL and Edinburgh Worldwide Investment, you can compare the effects of market volatilities on FIRST TRUST and Edinburgh Worldwide 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 Edinburgh Worldwide. Check out your portfolio center. Please also check ongoing floating volatility patterns of FIRST TRUST and Edinburgh Worldwide.
Diversification Opportunities for FIRST TRUST and Edinburgh Worldwide
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between FIRST and Edinburgh is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding FIRST TRUST GLOBAL and Edinburgh Worldwide Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edinburgh Worldwide 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 GLOBAL are associated (or correlated) with Edinburgh Worldwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edinburgh Worldwide has no effect on the direction of FIRST TRUST i.e., FIRST TRUST and Edinburgh Worldwide go up and down completely randomly.
Pair Corralation between FIRST TRUST and Edinburgh Worldwide
Assuming the 90 days trading horizon FIRST TRUST GLOBAL is expected to under-perform the Edinburgh Worldwide. But the etf apears to be less risky and, when comparing its historical volatility, FIRST TRUST GLOBAL is 1.11 times less risky than Edinburgh Worldwide. The etf trades about -0.26 of its potential returns per unit of risk. The Edinburgh Worldwide Investment is currently generating about 0.5 of returns per unit of risk over similar time horizon. If you would invest 16,920 in Edinburgh Worldwide Investment on September 20, 2024 and sell it today you would earn a total of 2,500 from holding Edinburgh Worldwide Investment or generate 14.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FIRST TRUST GLOBAL vs. Edinburgh Worldwide Investment
Performance |
| Timeline |
| FIRST TRUST GLOBAL |
| Edinburgh Worldwide |
FIRST TRUST and Edinburgh Worldwide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FIRST TRUST and Edinburgh Worldwide
The main advantage of trading using opposite FIRST TRUST and Edinburgh Worldwide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FIRST TRUST position performs unexpectedly, Edinburgh Worldwide 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 Edinburgh Worldwide will offset losses from the drop in Edinburgh Worldwide's long position.| FIRST TRUST vs. FIRST TRUST GLOBAL | FIRST TRUST vs. FIRST TRUST GLOBAL | FIRST TRUST vs. FIRST TRUST GLOBAL | FIRST TRUST vs. FIRST TRUST GLOBAL |
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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