Correlation Between Mesirow Financial and First Trust
Can any of the company-specific risk be diversified away by investing in both Mesirow Financial and First Trust 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 Mesirow Financial and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mesirow Financial Small and First Trust Specialty, you can compare the effects of market volatilities on Mesirow Financial and First Trust 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 Mesirow Financial with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mesirow Financial and First Trust.
Diversification Opportunities for Mesirow Financial and First Trust
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mesirow and First is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Mesirow Financial Small and First Trust Specialty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Specialty and Mesirow Financial 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 Mesirow Financial Small are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Specialty has no effect on the direction of Mesirow Financial i.e., Mesirow Financial and First Trust go up and down completely randomly.
Pair Corralation between Mesirow Financial and First Trust
Assuming the 90 days horizon Mesirow Financial is expected to generate 1.33 times less return on investment than First Trust. In addition to that, Mesirow Financial is 2.3 times more volatile than First Trust Specialty. It trades about 0.22 of its total potential returns per unit of risk. First Trust Specialty is currently generating about 0.67 per unit of volatility. If you would invest 396.00 in First Trust Specialty on September 3, 2024 and sell it today you would earn a total of 32.00 from holding First Trust Specialty or generate 8.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mesirow Financial Small vs. First Trust Specialty
Performance |
| Timeline |
| Mesirow Financial Small |
| First Trust Specialty |
Mesirow Financial and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mesirow Financial and First Trust
The main advantage of trading using opposite Mesirow Financial and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mesirow Financial position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| Mesirow Financial vs. Vanguard Small Cap Index | Mesirow Financial vs. Vanguard Small Cap Index | Mesirow Financial vs. Vanguard Small Cap Index | Mesirow Financial vs. Vanguard Small Cap Index |
| First Trust vs. Tekla Healthcare Investors | First Trust vs. Tekla Life Sciences | First Trust vs. Cohen Steers Reit | First Trust vs. XAI Octagon Floating |
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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