Correlation Between First Trust and IM Global
Can any of the company-specific risk be diversified away by investing in both First Trust and IM 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 IM Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Exchange Traded and IM Global Partner, you can compare the effects of market volatilities on First Trust and IM 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 IM Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and IM Global.
Diversification Opportunities for First Trust and IM Global
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between First and IRBA is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Exchange Traded and IM Global Partner in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IM Global Partner 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 Exchange Traded are associated (or correlated) with IM Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IM Global Partner has no effect on the direction of First Trust i.e., First Trust and IM Global go up and down completely randomly.
Pair Corralation between First Trust and IM Global
If you would invest 2,838 in First Trust Exchange Traded on September 1, 2024 and sell it today you would earn a total of 232.00 from holding First Trust Exchange Traded or generate 8.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
First Trust Exchange Traded vs. IM Global Partner
Performance |
| Timeline |
| First Trust Exchange |
| IM Global Partner |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
First Trust and IM Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and IM Global
The main advantage of trading using opposite First Trust and IM Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, IM 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 IM Global will offset losses from the drop in IM Global's long position.| First Trust vs. American Century Quality | First Trust vs. T Rowe Price | First Trust vs. ClearBridge Large Cap | First Trust vs. Sterling Capital Focus |
| IM Global vs. WisdomTree Trust | IM Global vs. QRAFT AI Enhanced Large | IM Global vs. Northern Lights | IM Global vs. First Trust Exchange Traded |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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