Correlation Between First Trust and Texas Capital
Can any of the company-specific risk be diversified away by investing in both First Trust and Texas Capital 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 Texas Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Multi Manager and Texas Capital Texas, you can compare the effects of market volatilities on First Trust and Texas Capital 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 Texas Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Texas Capital.
Diversification Opportunities for First Trust and Texas Capital
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and Texas is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Multi Manager and Texas Capital Texas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Texas Capital Texas 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 Manager are associated (or correlated) with Texas Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Texas Capital Texas has no effect on the direction of First Trust i.e., First Trust and Texas Capital go up and down completely randomly.
Pair Corralation between First Trust and Texas Capital
Given the investment horizon of 90 days First Trust Multi Manager is expected to generate 0.9 times more return on investment than Texas Capital. However, First Trust Multi Manager is 1.11 times less risky than Texas Capital. It trades about 0.08 of its potential returns per unit of risk. Texas Capital Texas is currently generating about 0.06 per unit of risk. If you would invest 1,457 in First Trust Multi Manager on August 30, 2024 and sell it today you would earn a total of 796.00 from holding First Trust Multi Manager or generate 54.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 47.68% |
| Values | Daily Returns |
First Trust Multi Manager vs. Texas Capital Texas
Performance |
| Timeline |
| First Trust Multi |
| Texas Capital Texas |
First Trust and Texas Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Texas Capital
The main advantage of trading using opposite First Trust and Texas Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Texas Capital 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 Texas Capital will offset losses from the drop in Texas Capital's long position.| First Trust vs. iShares Russell 2000 | First Trust vs. iShares Russell Mid Cap | First Trust vs. iShares Russell 1000 | First Trust vs. iShares Russell 1000 |
| Texas Capital vs. Dimensional ETF Trust | Texas Capital vs. Vanguard Small Cap Index | Texas Capital vs. First Trust Multi Manager | Texas Capital vs. Vanguard SP Small Cap |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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