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
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mesirow and First is -0.33. 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 6.23 times less return on investment than First Trust. But when comparing it to its historical volatility, Mesirow Financial Small is 1.1 times less risky than First Trust. It trades about 0.01 of its potential returns per unit of risk. First Trust Specialty is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 283.00 in First Trust Specialty on November 27, 2024 and sell it today you would earn a total of 165.00 from holding First Trust Specialty or generate 58.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| 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. Credit Suisse Multialternative | Mesirow Financial vs. Small Pany Growth | Mesirow Financial vs. Glg Intl Small | Mesirow Financial vs. Versatile Bond Portfolio |
| First Trust vs. MFS High Income | First Trust vs. MFS High Yield | First Trust vs. Blackrock Muniholdings Quality | First Trust vs. MFS Government Markets |
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 Directory module to find actively traded commodities issued by global exchanges.
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